French automotive giant Renault has decided to slash its global production capacity by nearly a quarter under a renewed five-year programme that is targeted at making the organisation lean and profit-focused. India, which is the fourth-biggest automotive market in the world, however, is among the handful of markets where Renault will pull up its socks and optimise operations.
New CEO Luca de Meo, who took over in the middle of last year, is aiming to reposition Renault as a modern brand that has electrification, hybridisation, technology and services at the core of its brand premise. India is among the large markets in the world prioritising electrification for the future.
Renault will bring down its global car production to 3.1 million by 2025 from the 4 million clocked in 2019. This will involve shifting focus to larger and more premium cars and fully electric cars bringing in better margins. The company hopes to make all local units profitable by 2023.
“The fact that we did not reach the profitability we wanted does not mean we want to give up on our global footprint. It means we will need another strategy on product and rightsizing (of production) where necessary. We have done this, for example in Brazil, where we have stopped the rush for market share at the expense of profitability. We will optimise our operations in Latin America, India and Korea,” de Meo said in his maiden address since taking over the reins.
India houses one of Renault’s six global design and engineering centres as well as one of its 16 vehicle-production sites, which it shares with Nissan. The French major is presently the sixth-largest vehicle maker in India. In the April-December period the company saw sales of 60,660 units, representing a market share of 3.4 percent, as per data shared by the Society of Indian Automobile Manufacturers.
Products
Under its new strategy, Renault will shift its focus from the A segment, where it has the Kwid, and bring out models in the B, C and D segment. The Kiger compact SUV and a compact sedan, both of which are based on the new Kwid platform, will be launched in India and will be part of the B segment.
The C segment will see the introduction of a new SUV that is longer than the Renault Duster. There is no confirmation of it coming to India yet. Over the next two years, however, Renault will bring in the electric version of the Kwid.
“In Europe we will reconquer the C segment to generate a margin but we will focus on more profitable segments and channels in countries such as Russia, India, Brazil and South Korea”, added de Meo.
Over the past few years, Renault cleaned up its India product portfolio by getting rid of multiple slow-moving models such as Fluence, Koleos, Pulse, Scala, Lodgy and Captur from 2011. The Kwid, Duster and Triber make up Renault’s current model line-up in India.
Failures
Renault’s bet on India comes at a time when its western rivals have given up on the country. General Motors became the first carmaker in recent years to exit the market after repeatedly failing to make its operations profitable since entering the country in the mid-1990s.
Ford Motor Company, which has said it will continue in India for the time being, could not go ahead with the proposed tie-up with Mahindra & Mahindra, understood to be the lifeline that the US-based brand needed for survival in India.
After 23 years of continuous operations Japanese giant Honda pulled the plug on one of its two plants in India, phasing out a couple of models including one that was brought back only a year ago.
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