Chennai: The Renault-Nissan passenger car project in India is crucial to Nissan Motor Co’s European plans, a senior official of the Japanese firm said on Thursday.
Europe contributes 24% of Nissan’s car sales. Japan’s third-biggest automaker said it sold 400,000 cars in Europe in 2008-09 (April/March) down from 530,000 a year ago.
“If it collapses, our European plans collapse,” Colin Dodge, executive vice president and chief recovery officer at Nissan, told reporters in Chennai, where he was inspecting a new manufacturing plant.
“Our focus is on Russia, India, China and the Middle East, which are growing very well,” Dodge said.
Nissan expects the Indian car market to grow to over 2 million units by 2012, up from 1.5 million passenger vehicles sold in 2008-09.
“We are targeting a market share of 5.7% in India by 2012,” Colin Dodge said.
“In China and Russia, five years back we were nowhere, and now we have more than 5 percent market share. India is a similar market.”
Renault announced in December that it would be freezing investments in certain projects, including the Indian project.
Renault-Nissan Automotive India is a joint venture to manufacture passenger cars.
The alliance has planned investments of Rs4500 crore over 7 years, starting February 2008. It currently employs 300 people, and will employ up to 3,000 by 2012.
The manufacturing plant, with a capacity to make 400,000 units per year, is being built at Oragadam in Chennai. Production will start with 200,000 units, and will be ramped up later.
The Chennai car plant is expected to begin exporting vehicles to Europe from the second half of 2010. It will export 110,000 units in 2010-11, later increasing to 180,000 units.
“By manufacturing the cars in India, the company sees a 5% reduction in costs, than if they had been manufactured anywhere else,” Dodge said.
“This is significant as margins for small cars is very thin.”
The company will also export more than one million auto parts from the new plant to other Nissan production facilities.