The future of the car industry belongs to emerging markets, high-profile chairman and chief executive officer of the Renault Nissan Alliance Carlos Ghosn has said.
Interacting with journalists from The Hindu Group of publications at its offices here on Thursday, he said much of the sales and expansion in the sector was currently happening in such markets.
Mr. Ghosn said his own background — he was born in Brazil and educated in Lebanon — helped him to “get a sense of what it means to be in the emerging markets.”
Mr. Ghosn was particularly impressed by the “frugal mindset” of Indian companies. Justifying the multiple partnerships his Alliance has entered into in India, he said “this allowed us to learn a lot more, especially on frugal engineering and product planning.”
In this context, he cited a huge difference in the cost estimates made by an Indian engineer and that of “our own engineer” for the same project. “What an Indian engineer promises to do with one, my engineer tells me we need five to complete,” he said.
Driving strategy
The Indian frugal mindset was an important learning element driving the global strategy of the Alliance, Mr. Ghosn said. The learning in India could be used by it for emerging markets such as Vietnam, Iran, Nigeria and Indonesia. The “next wave” in the industry could very well be happening in the emerging markets.
“Are you going in the right direction? That is more important,” Mr. Ghosn said, justifying the multiple partnership arrangements. In this context, he mentioned how the Alliance was “struggling to have even a 5 per cent market share in Brazil” where it had no partner.
“I don't want to repeat this mistake in India.” The results were, however, different in China and Russia where the Renault Nissan Alliance had gone in for partnerships with local companies.
Mr. Ghosn said the India experience could prepare it for unfolding opportunities in the emerging markets.
Fielding questions, he said alliances were the way forward in the global industry. The levels of investment required and the need to be present everywhere (in terms of segments and geography) would “drive the industry together.”
Asserting that he did not believe in acquisitions, he said companies had to work together. With none willing to give up brand identity, it would prove a big challenge for companies.
The way forward “is to combine like us,” he asserted.
“It [the Alliance] is a unique combination. It's an unlikely alliance. But we're the only one that has created value.”
Mr. Ghosn was in Chennai for the inauguration of the Rs. 4,500-crore car plant of the Renault Nissan Alliance, which saw the rollout of the Micra car on Wednesday. The plant at Oragadam near Chennai will eventually have a capacity of four lakh vehicles.
In India, the Alliance has an ongoing production relationship with the Mahindras for the Logan car. The Alliance will partner Bajaj Auto for an ultra low-cost car, and Ashok Leyland for light commercial vehicles and a small car.
