Chennai: The world’s fourth largest auto maker, Renault-Nissan, opened its new car plant in Chennai, where it will build the Micra as part of efforts to gain a share of India’s small-car market, even as it makes up for lost time.
The alliance also plans to introduce a sedan variant of the Nissan Micra, a global small car made for developing countries such as India, Thailand and Mexico that will also be exported to Europe and Africa from the plant in Oragadam, near Chennai, that was commissioned on Wednesday.
Renault SA aims to launch more small cars in India as Carlos Ghosn, chief executive of both companies, fortifies his India plan, currently restricted to the Logan, which it makes with Mahindra and Mahindra Ltd.
“Just as Nissan came up with the Micra, you can expect Renault to come up with an offer for the B, B+ segment soon,” said Marc Nassif, managing director of Renault India, referring to a range of hatchbacks dominated by Maruti Suzuki Ltd’s Swift and Hyundai’s i10.
Ghosn expects the Micra, sales of which will begin in June, to boost the alliance’s fortunes as the Indian market is dominated by small cars.
New standards: Carlos Ghosn stands next to a Nissan Micra in Chennai on Wednesday. Ghosn said the new facility in Chennai commissioned on Wednesday will serve as a benchmark for other company plants. Ganesh / Mint
The alliance’s moves in the Indian market come as competition in the small-car segment gets tougher; in the last quarter, all car launches have been in this segment. General Motors launched the Beat in January, followed a month later by Volkswagen with the Polo. Last week Ford launched the Figo. Toyota and Honda are preparing to launch their made-for-India small cars next year.
“They (the alliance) can catch up. India is still at the very beginning of where car sales will be 20-30 years from now,” said Paul Blokland, director at Segment Y, an auto consultancy. “So even if you enter 10 years later, catching up is possible.”
Mahindra and Renault have been disappointed with the Logan’s sales, which have plateaued to 4,981 units so far this fiscal.
“There are discussions at this point for the repositioning and further simplification of the car,” Ghosn said at a press conference in Chennai on Tuesday. “As soon as these discussions reach a conclusion, they will be announced.”
Renault and Nissan Motor Co. also plan to tap into the market for more expensive cars. The firm plans to start selling the Fluence sedan and the Koleos sports utility vehicle in India next year. Nissan has said it will launch nine cars, out of which five will be fully imported. Nassif said these cars would help build the brand while the small cars would boost volumes.
The alliance also plans to use the new India plant as a training base for workers at its plant in Morocco, delayed by a year due to the global slowdown and expected to open in a year. Both plants are almost identical and are designed to make cars of either alliance partner.
The Chennai plant, spread over 2.6 million sq. m, was built with an investment of Rs4,500 crore, about half or Rs2,300 crore of which has already been committed. The Morocco plant, coming up in Tangiers, is of similar size and will see an expected investment of $1 billion (Rs4,500 crore). The formal training process is expected to kick off by the end of this year, Nassif said.
Ghosn said in his inaugural address that the Oragadam facility will serve as a benchmark for other company plants.
The Chennai plant will start mass production in May and is expected to reach full capacity utilization by 2012. The Chennai plant will export cars to 100 countries including 35 in Europe.