Renault gears up for next big bet in India

As Renault prepares for the unveiling of its Captur SUV crossover in the next couple of months, it marks yet another important chapter for the French automaker’s journey in India.

Expected to be priced between ₹13 lakh and ₹18 lakh, the Captur will be part of one of the fastest-growing product segments in the country. Based on the Duster platform and branded as Kaptur in Russia (where it recently completed its first anniversary), it will be part of a rapidly growing product segment that includes the Hyundai Creta and Mahindra XUV500.

Renault would have every reason to feel optimistic considering that its brand is reasonably well established in India following the heady market response to its compact Kwid. Yet, Sumit Sawhney, Country CEO & MD of the Indian arm, would rather not get too excited and insists that it is best to take one step at a time.

“We are just building the foundation and are in not any race to get to the top,” says Sawhney. “In the medium term, we want to have a consistent 5 per cent plus market share and be the top European brand that is admired by its customers and dealers.”

Sawhney recalls the Duster launch in 2012 and buzz it created. People then were still not too sure what brand Renault represented though they made a beeline for the compact SUV that captured the fancy of the market. To that extent, the Duster overwhelmed the mother brand though this changed with the Kwid that debuted in 2015. “Today, customers understand Renault and this has a lot to do with the Kiwd’s success,” he says.

The key, according to him, is to sustain this 5 per cent market share, which is important in a market where the top two players (Maruti Suzuki and Hyundai) account for nearly 70 per cent. This puts in perspective why the building blocks in terms of a retail network and smart product strategy become critical. By end-December, Renault has targeted 320 outlets, up from 270 in 2016.

“We are expanding our reach and are in portfolio development mode. Keep in mind that we sell only three cars: Kwid, Duster and Lodgy. Even with this limited portfolio, holding this level of market share is good,” insists Sawhney. All the other models, right from Fluence and Koleos to Pulse and Scala are pretty much part of the archives.

Encouraging news has also been coming in on the dealer satisfaction space where Renault has made impressive strides and is now only behind Toyota and Maruti. This clearly shows that its retail fraternity is content though the challenge is to ensure that these levels sustain over the long-term. In an intensely competitive market like India, Sawhney likens it to “a big war where we need to win battles first in order to triumph eventually”.

This will require carefully thought out product plans and while constantly pegging away with new launches to keep the customer’s interest going. It is here that the Captur’s success is important and it ideally takes forward the growth momentum created by the Kwid. From Renault’s point of view, these represent products that create segments of their own (like Duster in compact SUVs) or subsegments (like Kwid) albeit with a differentiator.

Despite this happy backdrop, there is no denying the fact that sales of products like Duster have dropped significantly from the highs of over 5,000 units a month soon after its launch. Today, its numbers are less than half of those peak levels which should be cause for concern.

“The Duster is four years old and we need to do things faster. We were late in terms of lifecycle enhancements,” concedes Sawhney. Yet, he believes that it still remains an aspiration brand for smaller towns where people who “drove in Indian SUVs till yesterday” now want an MNC brand. It is also equally true that till the Kwid came along, the Duster was largely confined to metros and will now be able to access vast areas of the hinterland with more dealerships getting commissioned.

“The Duster is moving slowly to smaller towns even while it continues to have a strong draw in urban regions,” says Sawhney. Going forward, it is only natural to have the Captur take over the SUV mantle at metros while the Duster grows its presence in smaller towns and cities. These are also the regions where the Kwid has a core market and it will be interesting to see how things pan out eventually.

Sawhney remains upbeat about the Duster given that it is a tried-and-tested product, which has “proved its mettle” over the last five years. “The same optimism extends to the Lodgy, which has not done so well but I know we have a future especially when everyone is exiting the MPV space,” he says.

The Renault India chief says the key is to be patient and wait for customers to queue up for the Lodgy especially when there are only a handful of products on offer in this segment. For the moment, Toyota Kirloskar’s Innova Crysta is the undisputed monarch of the MPV segment despite its relatively high price tag.

The Lodgy can perhaps double up as the economical alternative and fill the void left by the Chevrolet Tavera and Enjoy as well as Honda Mobilio. All this will eventually depend upon market dynamics and how customer preferences shape up in the coming years.

Sawhney will have reasons to feel pleased with how the script has evolved for Renault over the years. Since the time it entered India with the Logan though a joint venture, it has learnt from its failure where the most important takeaway was localisation and the need for frugal engineering.

It is this lesson that led to the creation of Kwid, which has gone on to establish the mother brand. How Renault keeps the momentum going with Captur and future products, while rebooting Duster and Lodgy, will be its biggest challenge. For now, India is among its top 10 markets and tipped to climb the charts even as hot favourites like Latin America led by Brazil remain wobbly.