Renault plans small car in India; may set up plant in Gujarat

Wednesday 07 December 2011, 17:29 PM by

Renault SA may soon invest Euros 1.5 billion (Rs. 10,335 crores) in a small car manufacturing plant in Gujarat, India. The French automotive giant and its global partner Nissan are working upon a new small car in the country, which is essential for establishing a foothold in the world's fastest growing emerging car markets.

The company is currently in talks with the government of Gujarat to acquire land for the plant. A Gujarat government official said, “The company held a closed-door meeting with top government officials a couple of weeks back.” He further added, “They are exploring possibilities of setting up a plant here.” However, both parties are being quite hush-hush about the affair. On the condition of anonymity, the official continued that the French company has not made a formal proposal but the investment will be “massive”.

Renault plans small car in India; may set up plant in Gujarat | CarTrade.com
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There is a possibility that the company will be exporting cars from this new facility and it is looking for land near Vadodara, which is located quite close to ports. Renault seeks a piece of land that is spread over more than 100 acres, and the first phase of investment may involve more than Rs. 2000 crores.

Another person with more information of the matter said that the overall investment will be in the tune of Euros 1.5 billion and the plant will be expected to churn out at least 400,000 vehicles annually. According to him, “The investment includes setting up a new plant, the project development cost and developing a vendor base near the plant. The car is expected to be rolled out by 2015.”

While asserting the company's focus on India, Marc Nassif, Managing Director of Renault India, commented that the decision has not been finalised yet. Direct emails sent to Gerrad Detourbet, who will be leading this endeavour, were not answered, similar to the emails sent to the spokeswoman of Renault SA.

Detourbet is best known for his work on Logan, the company's most popular low cost car across the globe, and has been given command of the project. He currently holds the position of the head of Renault's entry level division and will soon be moving to India.

Nassif said that the French car maker has not registered profits in India and will be relying on global operations for investments. He said that the company is waiting for Detourbet to take the leash of the project and see how things pan out.

According to Nassif, the company will have cars with price difference of Rs. 2-4 lacs to capitalise on the potential of the entry level car segment. As per experts, the small car market is growing steadily across the globe, with India accounting for a large share of the same.

“The Indian market will remain a small car market for years to come. But small cars will be important for global markets, with consumers getting more and more concerned about environmental changes,” commented Abdul Majeed, auto practice leader at PricewaterhouseCoopers (PwC). “This is the right time for them (Renault) to invest in India. If they do not do this investment now, it will get difficult for them.”

Reportedly, Detourbet's objective is to make a quality small car at the least possible price. Upon his arrival in India, he drove popular small cars like Maruti Suzuki Alto, Hyundai Santro and Ford Figo and was pleased by Alto the most.

Renault's small car will be designed in Mumbai and developed wholly in India. After being launched in the largest market for domestic cars, it will also be exported to countries, where small cars are popular.