Renault Kwid shakes up the big boys of India’s small car market4 min read . Updated: 30 Aug 2016, 02:52 AM IST
Maruti Suzuki readying next-gen Alto, Hyundai a new small car, even as Renault launches the more powerful Kwid 1.0
New Delhi: For at least three months after Renault Kwid’s launch in September 2015, the performance and build of the car was intensely debated at the management committee meetings of Maruti Suzuki India Ltd until the market leader approved a so-called tall-boy design for its next-generation Alto, which will be introduced in 2018.
India’s second largest car maker Hyundai Motor India Ltd too has started a project code-named AH, which aims to introduce a similar design at the entry level.
The urgency on part of the top two companies was driven by the success of Kwid, which originated as Renault-Nissan chief Carlos Ghosn’s dream to build an affordable and practical small car for the world.
Owing to its SUV-ish design and localization drive (98% of its components are made in India) that brought down the cost of Kwid’s spare parts to at least 17% less than that of India’s best-selling car, Maruti Alto, the French firm has sold more than 80,000 Kwids in 11 months and comma-nds a 4.5% share in the world’s fastest growing car market.
Incidentally, this also makes Renault the highest selling car brand from the West in India.
It has achieved this feat in just four years of active operations even as its American and European counterparts, who have been in the country for longer, continue to struggle.
“#Kwid has received 165,000 bookings so far. (It) will touch 1 lakh sales next month. The most happening small car in years," tweeted Hormazd Sorabjee, editor of the country’s largest selling auto magazine Autocar India, and one of the country’s most respected auto experts.
On 22 August, Renault introduced a new variant of the Kwid with a one-litre petrol engine.
“1-litre Kwid (is) so much better to drive than 800cc engine. More sleepless nights for Alto," Sorabjee said in another tweet.
In an interview, Renault India Pvt. Ltd’s managing director Sumit Sawhney attributed his company’s success to not superimposing its global strategy in India.
“I think one of the key reasons (for Renault’s success) is that we have tried to handle India the way India is to be handled. India requires an India-specific strategy," Sawhney said.
“One of the examples is ground clearance. Ground clearance of this car is better than some of the SUVs in this country. That is a requirement in our country. So, we are giving more value than what people expect. Kwid is also a big small car. If you sit in the car, the rear space is very good; 300 litres of boot space is not there even in sub-4 metre sedans," he explained.
To be sure, Sawhney’s own stature has also risen in India’s automobile industry, which is different in nature from the global industry with the top three companies controlling 65% of the market. The passenger vehicle market is dominated by Maruti Suzuki, Hyundai Motor India and Mahindra and Mahindra Ltd.
But Renault’s future in India will largely hinge around the focus of its headquarter, and its ability to service customers better and address supply constraints, says Abdul Majeed, partner and auto practice leader at PricewaterhouseCoopers.
“For now, it seems to have got all the ingredients right," he said.
Sawhney’s immediate priority is to ramp up the Kwid’s production. From around 4,000 Kwids a month last year, Renault now makes 9,000 units, and Sawhney plans to add a third shift at the production line at the company’s plant in Chennai. The move will help him produce more than 10,000 cars every month, but that may still not be enough to meet demand and reduce the waiting period for the car.
At the same time, Sawhney is also expanding his sales and service network. After having opened 205 outlets in the first four years, Renault wants to open 65 more in 2016.
“The good part is that it does not have a credible rival in the market; the old warhorses are really old now," said a former auto industry executive on the condition of anonymity, referring to the Kwid and its rivals—the older Alto and Eon.
Alto continues to sell more than 12,000 units every month.
“...and it still has two years before market leaders come up with their next-generation products," the executive added.
The focus on Kwid also diverted Renault’s attention from other models. Sales of its once popular Duster SUV are dwindling. It introduced the new-generation Duster earlier this year, but the model has been unable to pick up momentum.
“What is happening is that the SUV segment is growing, but most of the growth is happening in the sub-4m segment. Most of the cars in that segment are seeing their sales go down, but we have been able to maintain our volumes," Sawhney claimed.
For now, Renault’s focus will continue to be on the Kwid and increasing its presence in the entry-level segment.
To be sure, Renault India’s 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 through a joint venture with Mahindra and Mahindra Ltd (M&M), failed to attract customers.
Renault scrapped its production venture with M&M in 2008.
After that, Renault partnered with Bajaj Auto Ltd to build an ultra-cheap car to counter Tata Motors Ltd’s Nano. The project was abandoned in 2011.
Then came the Duster, which changed Renault’s fortunes in India. And, finally, in 2015, it got its small car right.
“This is the difference between watching a soccer game and playing it. Today, we are into the game," Ghosn said when he unveiled the Kwid to the global media in Chennai in 2015.
It’s not even half-time now.