Pune: French car maker Renault SA plans to start assembling its low-cost sedan Logan in South Africa in early 2008, and, according to a person familiar with the matter, will source components from Indian manufacturers currently supplying to the company’s joint venture Mahindra Renault Ltd in India that produces the car here.
South Africa is a right-hand-drive-car market and will be the first country after India where the Logan’s right-hand-drive variant will be built.
Sylvain Bilaine, managing director, Renault India Pvt. Ltd, said the company is in the phase of “prototyping and exporting” components for right-hand-drive cars from India meant for the South African market. Bilaine, however, declined to comment on the Logan project in South Africa.
He added that the components exported from India could be for any platform, not necessarily for the Logan. “We are also studying how to export these components to other right-hand-drive markets, including Asean (Association of South-East Asian Nations) markets eventually,” he said.
A file photo of M&M’s Keshub Mahindra (left) with Renault’s Patrick Pe lata and Nissan’s Carlos Tavares
According to the person familiar with the matter who did not wish to be identified, the Logan will likely be assembled at Nissan’s plant in Rosslyn near Pretoria in South Africa and the first car will roll out of this plant in 2008.
Renault and Nissan Motor Co.?Ltd hold stakes in each other and share a chief executive.
Samples of components from manufacturers across India are currently being collected at Renault India’s warehouse on the outskirts of Pune, from where they will be shipped to South Africa, the person said.
Renault has a 49% stake in Mahindra Renault (Mahindra & Mahindra Ltd, or M&M, has the remaining 51% stake); in India, the Logan is produced at M&M’s factory at Nashik.
Indian auto component makers have become key suppliers to global companies leveraging their high quality and low costs.
Exports of auto components from India increased 33% to $2.8 billion (Rs12,880 crore then) in 2006-07 from $2.1 billion a year ago, according to the Automotive Component Manufacturers Association of India (Acma), an industry body. Renault’s CEO Carlos Ghosn has previously spoken of his faith in India’s “frugal” engineering capabilities.
Bilaine said Renault’s global sourcing initiative out of India was picking up steam, with the company identifying vendors and sourcing components for a range of cars for supply to markets in Europe. “We are in the final stages before exports of these parts,” he added.
According to the person familiar with the matter, Renault has told suppliers that initial supplies of parts to South Africa will be for testing, with volumes taking off in January 2008.
The South African launch of the Logan could be the first step towards launching the right-hand-drive version of the product across markets.
Earlier this week, Nissan and Renault agreed to set up a 400,000-units-a-year plant in Morocco that will make low-cost left-hand-drive cars and trucks for markets in Europe, Asia and North America.
Renault launched the Logan, its first low-cost car, in 2004 and currently manufactures it in seven countries, including Russia and Iran.
The car is likely to be soon available in five versions, including a compact hatchback and a pick-up variant, as the company tries to develop the Logan into a winning platform that will form the basis for a range of low-cost vehicles.
Renault’s Logan project could achieve a 6% operating profit margin in 2009, Ghosn told media earlier this week while signing the agreement for the Moroccan plant.
Nissan and Renault are considering launching a low-cost $3,000 car in India, one of the world’s fastest growing automobile markets.
Japan’s Nikkei newspaper reported on Thursday that Nissan had decided to join a project between Renault and two-wheeler maker Bajaj Auto Ltd to develop and produce an affordable car. Nikkei did not name its sources.
In India, Tata Motors Ltd is developing a Rs1 lakh so-called people’s car that will be launched in 2008.
In another development, Renault and Nissan announced plans on Thursday to open a new business centre or back office in Chennai that will employ more than 1,500 workers by 2010 and support the two companies’ global engineering, purchasing, design, cost management and information systems operations.
(AFP contributed to this story.)