Renault carves out a key role for India

In February 2011, Carlos Ghosn, Chairman of Renault, unveiled a five-year vision statement called ‘Drive the Change’ which focused on critical growth levers for the future. These included electric cars, cost-competitiveness and new global markets beyond Europe. On Thursday, the French automaker announced that the second phase of ‘Drive the Change’ would see the creation of a new international structure effective September 1. This is where the role of India will come into sharper focus with a split of the Asia-Pacific region.

New boundaries According to a Renault communiqué, a new Middle-East India region will now include the Middle East, the Gulf countries and the Indian subcontinent. The Asia-Pacific region will comprise China, ASEAN, Korea, Japan and Australia.

Bernard Cambierhas been appointed Chairman of the Middle-East India Region. His priority will be to boost sales in India and also get business ticking in Iran. Gilles Normand, now Chairman of Asia-Pacific, will focus on China where Renault recently signed a joint venture with Dongfeng. This recast is important since China and India are expected to become the world’s two leading economies within the next 20 years. Between now and the completion of ‘Drive the Change’ in 2016, this part of the world (which will include Pakistan, Thailand and Indonesia) could take up nearly 50 per cent of Renault’s growth potential.

Indian innings India is especially significant because it is home to a manufacturing and research powerhouse jointly created by Renault and its global ally, Nissan Motor. Not many people would have envisaged something of this magnitude five years ago when Renault had just parted ways with Mahindra & Mahindra on the Logan joint venture. It was also the time the global slowdown had virtually paralysed car markets in the West and companies had to cut back on investments.

During this time, Renault began creating a foundation at the back-end to build local competencies, one of the vital lessons learnt from the Logan debacle. India is now its nerve centre for frugal engineering and the following year will see the launch of a global compact car which could also make its way into Brazil and South Africa.

Even while its Asia-Pacific business has been realigned, India could still be an important hub for Renault’s script for ASEAN. Completely knocked down kits of the Duster have already been shipped out to Indonesia and, going forward, more countries like Malaysia, Thailand and Taiwan could be added to the list. It will also be interesting to see if the global compact car and the multipurpose vehicle which debut next year will head out to ASEAN too.

China is, of course, the largest automobile market in the world with over 15 million units produced annually. This number is expected to double by 2030 which pretty much explains why every carmaker wants to be present here. Yet, India will still have its place in the sun simply because it offers the best mix of top quality at competitive costs thanks to its competent supplier base.