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Business News/ Companies / News/  After many misses, Renault sets ambitious target for Kwid

After many misses, Renault sets ambitious target for Kwid

The French car maker hopes to sell as many as one million Kwids worldwide every year

Renault CEO Carlos Ghosn at the unveiling of the Kwid at Chennai on Wednesday. Photo: MintPremium
Renault CEO Carlos Ghosn at the unveiling of the Kwid at Chennai on Wednesday. Photo: Mint

Chennai: After a series of hits and misses, Renault SA chairman and chief executive officer Carlos Ghosn on Wednesday finally unveiled the French auto maker’s first entry-level small car in India with the revelation that company executives in Paris and Tokyo had five years ago given the thumbs down to the car eventually developed by Indian engineers.

The car Kwid, which will be priced at 3 lakh, will be sold in markets including India, South-East Asia, Latin America and Africa, Ghosn said in Chennai. India will become the manufacturing hub for the car in South Asia.

The company hopes to sell as many as 1 million Kwids worldwide every year, project director Gerard Detourbet said, without specifying a year by which Renault would reach that figure.

Maruti Suzuki India Ltd, India’s largest car maker, sells more than 1 million small cars in the country.

About 97% of components that have gone into the Kwid, which will compete with Maruti’s Alto and Hyundai Motor India Ltd’s Eon, have been locally sourced, according to Renault. That’s a record for any new car manufactured in the country.

Powered by a new 800cc petrol engine and developed on Renault-Nissan’s CMF-A platform, the car is key to realizing Renault’s ambition of increasing its India market share to 5% by 2016-17 from 2% now.

The platform will be used for many more cars, including Nissan’s sister brand Datsun’s upcoming Redi-Go small car, slated to be launched in India next year. Renault claims Kwid will offer best-in-class fuel economy, and cabin and boot space.

“When we talked of this particular platform and this particular car at the beginning, people in Paris and Tokyo said it is impossible, it cannot be made," Ghosn said.

The unveiling of the Kwid marks a significant transition in the strategy of Renault, which now wants more than just to make India a hub for manufacturing entry-level cars; the French car maker wants to adopt a peculiarly Indian mindset, which it believes is key to cracking emerging markets.

The Hindi word for it is jugaad, which can mean a quick-fix solution to a problem or an innovative way of making things work with few resources. With the new car, Ghosn and Renault will be taking the concept of jugaad to the world, having applied frugal and innovative engineering in developing the Kwid.

“We have been talking about it (jugaad) many times but actually it’s not just a buzzword (anymore), we have done it," Ghosn said.

According to Ghosn, the knowledge accumulated by Detourbet during his three-year stay in India developing the car will be crucial for the future of Renault and Nissan Motor Co., with which it has an alliance.

Kwid was not easy to develop but it was built with very aggressive product and cost targets, Ghosn said.

“The kind of localization levels that we have achieved, many companies think it is impossible for them to do in the beginning. We are marrying Indian skills with the French and Japanese and nobody else has done it," he said.

Renault has learnt how to meet price challenges by sending its own executives to India and then putting them in key positions at global levels so that they can leverage what they learnt in India to score in other emerging markets elsewhere.

Detourbet had a tough time convincing Indian suppliers to invest in capacity expansion. He had to fire some who signed contracts and later expressed their inability to manufacture a component at a price agreed earlier.

Renault India has not had much success in India after it started its solo journey four years ago. Barring the Duster, a compact sports utility vehicle, none of its cars have been successful in the country. For the Kwid, the company spent 2,000 crore to develop the small car platform and expand its Chennai facility.

Two officials who were at the helm while Renault developed the car in India have been put in key global positions. Former India managing director Marc Nassif is now vice-president for international engineering and Karim Mikkiche, who headed the Renault-Nissan Technology Centre in India, is now global vice-president (customer performance and test engineering) at the Franco-Japanese alliance.

“I would never tell you whether I have learned enough. I can tell you that Indian engineering power is immense and nobody has the potential to learn it all without Indian colleagues," Ghosn said.

In 2012, Ghosn pulled Detourbet out of retirement and sent him to India. From his new base in Chennai, Detourbet and his team built a car that will allow Renault to incorporate features to suit individual markets.

“I can build 10 cars on this platform," Detourbet said. “The objective is to sell one million cars worldwide (a year). If we don’t succeed here (in India), it will be very tricky."

Renault and Ghosn’s previous attempts to crack the cost-sensitive small car market have had little success. While the original Logan caught on unexpectedly in Europe, the Indian version, built in a joint venture with Mahindra and Mahindra Ltd (M&M), failed to attract customers.

Renault scrapped its production venture with M&M to manufacture the Logan in India in 2008. After the failure, Renault tied up with Bajaj Auto Ltd to build an ultra-cheap car to counter Tata Motors Ltd’s Nano. The project was abandoned in 2011.

“This is the difference between watching a soccer game and playing it. Today, we are into the game," Ghosn said when asked to compare development of Kwid with previous attempts to crack India’s small car market.

He called the car a product “of our belief in frugal engineering. There will be more to come. Obviously we are not going to stop in this journey".

An entry-level car is integral to the product range of auto makers, experts say.

“They need to have a decent understanding of it. They have to fundamentally rethink. The thinking is how they develop these entry-level products. Renault is not very open in terms of linking up with the outside world. In the entry-level segment, they have taken up the challenge," said Navi Radjou, an innovation and leadership strategist and writer of the books Jugaad Innovation and Frugal Innovation.

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Updated: 22 May 2015, 01:06 AM IST
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