Nissan-Renault is planning to double production capacity to eight lakh units by 2016 at its plant near Chennai. Such a move will help the alliance meets its target of a 10 per cent joint domestic market share and increase exports.
“It's a very competitive market and it will be a challenge to expand our operations and sales in India. Renault-Nissan is looking at a 10 per cent market share in India by 2016,” Mr Kou Kimura, CEO and Managing Director, Renualt - Nissan Automotive India, told Business Line .
At investments currently of about Rs 4,500 crore (over seven years), the 640 acre plant at Orgadam (near Chennai) is the greenfield alliance facility globally for the Franco-Japanese auto group. Though current annual capacity stands at two lakh units, by March this is already being extended to four lakh units on both high export and local demand.
“To meet our global growth targets (Nissan's Power 88 mid-term plan), we will have to double capacity at the Chennai plant by 2016. We will need to put in more money, but we have enough land, so the investment will be lower than the Rs 4,500 crore being invested for the first phase,” Mr Kimura said.
Mass segment models
The need for large production capacities is imminent. Nissan already has two mass segment models in India, the Micra hatch and Sunny entry sedan, for which demand is on the rise. An MPV, 'Evalia' will also be launched this year.
Renault, meanwhile, is now getting into the mass segment with the Micra-derived ‘Pulse' hatch and ‘Duster' compact-SUV.
“Renault is also working on a car below the Pulse. We're considering many more products for both companies and don't want to remain a niche player. India is a booming market,” Mr Kimura said.
Export base
Fast capacity expansion follows Nissan-Renault's strategy to make India an export base (to over 100 countries). The Chennai alliance plant supports overseas markets such as Europe, Japan and Thailand in components as well. In fact,
In a year and half, Nissan is already the second-largest car exporter from India (after Hyundai) and has sent most of its local production (over 1.25 lakh of 1.6 lakh production in 18 months) overseas.
Production capacities in developed markets such as Europe are also running at optimum levels. Higher cost-efficiencies and growing demand in emerging markets such as India, Thailand and Mexico, have encouraged the alliance to concentrate most of its fresh capacity-related investments to these, a Nissan official had said recently.