Renault-Nissan head Carlos Ghosn sees the company turning profitable in India by end 2013. Renault-Nissan will outgrow the rest of the auto industry in 2013 as well as 2014, Ghosn says.
"We still think that this market will be above 4 million cars by 2016, which means after the production that is taking place, growth will resume," he says in an interview to CNBC-TV18.
Nissan is planning to unveil Datsun’s hatchback model ‘Go’ by early next year. Reviving the brand after three decades, Ghosn claims it is bigger and wider than its nearest competitor the Maruti Alto. This coupled with a price tag of under Rs 4 lakh, Nissan hopes the ‘Go’ will win buyers a way from the big boys in the small car business.
The comeback of this launch is being led by Vincent Cobee, the global head of Datsun, who believes the new car will be priced substantially lower than Rs 4 lakh.
Furthermore, Cobee sees India as an extremely competitive market with capable set of engineers and localised suppliers, which makes for a very good manufacturing hub. “This car will primarily serve the Indian market. But we are all businessmen and if there is an opportunity to export to some other markets we will consider it positively,” he adds.
Below is the verbatim transcript of their interview on CNBC-TV18
Q: Is Datsun your new ultra low-cost car?
Ghosn: No, the Datsun is not the new ultra low-cost car. Datsun is about reliability, modernity, affordability and high value. With the latest technology, the Datsun is about bringing back these values to high-growth markets such as India.
Q: Is there a future for the ultra low-cost car?
Q: So you are not giving up on that?
Ghosn: Not at all. You are going to see ultra-low-cost car coming. You are going to see cars coming at a lower price points and addressing different kind of markets. There is a huge demand for cars with high value and affordability.
Q: What gives you the confidence?
Ghosn: I was the first one to recognise the value of the Nano because it addressed a need that nobody had.
Q: But the car failed?
Ghosn: That is a different story. The car is the answer to the need and the need is still there. There is a potential for a car that can meet those needs and that is what we are pursuing.
Q: When you are going to launch a low-cost car?
Ghosn: Within the next two years.
Q: Will it be priced lower than the Datsun but higher than the Nano?
Ghosn: Exactly. That is exactly the specific price-point that we will be aiming at.
Q: Will Nissan launch the model in association with a domestic partner?
Ghosn: Let us first launch the Datsun. This is not the end of what we will launch in the high-growth markets. With a strong stable of models under the Datsun brand, we will then focus on our version of the ultra-low-cost car.
Q: Do you believe that you can continue your partnership with Bajaj Auto on the quadricycle?
Ghosn: We do not think that we have to do everything that others do. I think Bajaj has a very original vision and are have been very successful in the market. But I do not think we can replicate what they do. We will launch our own answer to those needs in the market. Though I do not think we are going to launch a quadricycle in India, but our vision is to launch an ultra-low-cost car.
Q: That will be with Ashok Leyland or without Ashok Leyland ?
Ghosn: We have many partners in India. That is what I love about India —there are so many people with whom you can work with and learn from. So, it's a two-way street. This interaction between technology and learning the way of doing things in India is what I call frugal engineering with which you can make very powerful products.
Q: After being in India for almost five years through Renault and Nissan, how do you plan to achieve your target of a 10-percent market share by 2016?
Ghosn: I can understand the skepticism because four years ago we were selling hundreds of cars in India.
This year we are close to achieving, as an alliance, a 5-percent market-share in 2013. With our range of products and the capacity our plant in Chennai, we offer a proposal that consumers in India cannot refuse. That is what makes us confident.
Q: What about the risk of an overlapping of brands?
Ghosn: Though the pieces of technology are the same, no two cars are alike. Each is different in design and offer completely different choices.
Q: You don't believe you are cannibalising your own brand?
Ghosn: Not at all. A lot of car manufacturers are using same piece of technology, but are giving it completely different body, completely different specification. The consumer in India will be able to see a European car with Renault and a Japanese car with Nissan. The fact that we are sharing some technology which is not even visible for the consumer, he does not even care about it not making him think that it is the same technology or the same product.
Q: Do you still want to continue with the full product portfolio approach? You don’t want to focus on a specific category? For instance you met the success in the Duster category because it was a category that you actually created. You created and you were the first mover in the compact low-cost sports utility vehicle (SUV) market.
Ghosn: Yes and you are going to see more of this happening. We are here to respond and understand the demand of consumer. In India there are so many new consumers coming to the market that you must make sure that you understand what they want and make sure that you are making products for them.
Q: By when will Renault-Nissan be profitable in India?
Ghosn: I think that by the end of 2013, we will be making money in both cases.
Q: What kind of capex plans have you outlined for this market because it is one of your growth market in the current situation where the Indian economy has slowed down considerably, the Indian auto industry is going through its worst phase in over a decade, will you be able to outgrow the rest of the industry, atleast in particular segments?
Ghosn: In 2013, without any doubt we will outgrow the rest of the industry, in 2014, as well. It is not because in the last six months there have been a little bit mediocrity at the level of the auto industry in India that India has lost its potential. We still think that this market will be above 4 million cars by 2016, which means after the production that is taking place, growth will resume.
Q: Your competitors like Ford are now looking at India as an export hub. The EcoSport is going to be exported to other markets from here. Are you looking at using India as an export hub?
Ghosn: Yes, we are.
Q: For other emerging markets, for the Datsun brand in specific?
Ghosn: We are already exporting the Micra.
Q: Yes, for the Datsun brand in specific?
Ghosn: The first Datsun are going to be mainly dedicated for the Indian market. It will not be exported far away but particularly in the region. But the Datsun brand has a basic value to be local. So, I don’t think we are going to be massively exporting the Datsun from India to far-reaching markets.
Q: Will the ultra-low-cost car be a separate brand altogether as well?
Ghosn: You will see.
Q: Europe continues to struggle, we have not really seen a pick up as far as the economic climate and environment is concerned, what do you think of the global auto industry and the economy in general?
Ghosn: I don’t think you are going to see a pick up in Europe before 2015. So, we are all extremely prudent about the situation in Europe. Year 2013 will be another record year for the auto industry.
The auto industry has reached 79 million cars last year and is going to be above 80 million this year, near 81 million and 2014 looks like another year of growth. This is because some markets are down, but other markets are going up, the US market is up, Chinese market is up, the North African, African markets are all up. So, there are still a lot of engine of growth to maintain the car industry on the right path.
Q: What is the strategic rationale behind reviving the Datsun brand? Renault and Nissan already are in the value for money market.
Cobee: The rationale is coming out of two analyses. Firstly, power in the world is shifting from the mature economies the power of yesterday to a series of high growth countries, India being at the forefront of it. This is translating into emergence of the middle class. Secondly, we analyse middle class wish, fears, wants and came to a conclusion that they deserved and absolutely needed a very particular approach not only in terms of products but also in terms of marketing.
For us the Datsun brand in the 30's, 40's, 50's, 60's was bringing hardcore engineering, very innovative engineering and modern styling to an emerging middle class.
Q: How is it differentiated from a Renault Nissan brand for instance? You are in the value for money segment, how much more value for money is this going to be?
Cobee: In a nutshell, Nissan delivers global products under global brand and in India its offering products from Rs 4 lakh all the way to Rs 10 lakh or Rs 11 lakh. The car that you have here is going to be priced substantially lower than Rs 4 lakh.
Q: What is substantially lower?
Cobee: Substantially lower is much less than Rs 3.99 lakh.
Q: You mean the Datsun brand in India will not be above Rs 4 lakh and that will be the space that will continue to be addressed by Renault Nissan?
Cobee: The cars that Datsun will bring and we are talking about three cars over three years will be completely positioned below Rs 4 lakh under the current macro economic assumption whereby the Nissan brand will offer products mostly above Rs 4 lakh – vast majority will be above Rs 4 lakh.
Q: This is an emerging market car. So, it is a global product launched in India. Are you looking at using India as an export hub because that is what some of your competitors like Ford are doing for instance with the EcoSport?
Cobee: India is an extremely competitive market. It has very capable set of engineers, very capable and localised suppliers, it is a very good manufacturing hub. So, this car has been developed for India, will primarily serve the Indian market. But we are all businessmen and if there is an opportunity to export to some other markets we will consider it positively.