Mr. Carlos Ghosn, Chairman and CEO of Renault Nissan Alliance, has strongly defended alliances with multiple Indian partners, who have no domain expertise in car production.
Addressing a press conference here on Tuesday, on the eve of the inauguration of the Greenfield plant of Renault Nissan Alliance at Oragadam, Mr. Ghosn said these partners would bring to the table their expertise in frugal engineering, frugal product planning and frugal marketing.
“If they are good in car production, they would not have come to us. We have the expertise in car production,” he said. In this context, he said that multiple partnerships allowed Renault Nissan Alliance to “learn a lot more”.
Mr. Ghosn asserted that “we don’t do same thing with different partners.” To a question, he said, “Our learning from India is not finished as yet.” He felt that a part of the learning in India could be used by Renault Nissan Alliance for the emerging markets.
Besides the running tie-up with the Mahindras for Logan production, Renault Nissan Alliance had already announced a partnership with two and three-wheeler maker Bajaj Auto for the production of ultra low cost car. It had recently said it would tie up with the commercial vehicle maker Ashok Leyland for a small car project.
Fielding a range of questions, Mr. Ghosn hinted that Renault Nissan Alliance would be open to all options vis-à-vis servicing its strategy. In this context, he felt that equity tie-up was not an objective by itself. If that fitted into overall strategy, he would not mind opting for it. Nevertheless, he admitted that an equity tie up was a way to solidify a relationship. “It is a way of reaching to something… To make sure that the market and your own people understand that it is a long-term relationship,” he pointed out.
To a question, he said he was not very satisfied with the Logan sales in India. He said he had discussed the issue with partner Mahindras. Efforts were on to see how the organisation could be simplified and made nimble. He, however, asserted that “Logan will stay in Indian market and will continue to enjoy our services.”
While the West was moving to East, North was heading to the South. “India is both East and South,” he said. Estimated at two million at the moment, the Indian car market, he said, had the potential to scale up to five million in 10 years. Nissan and Renault between them would bring out a fair share of this “missing capacity” in India, he said.
He said the Oragadam facility would churn out 200,000 cars by 2012. Fifty per cent of this would be exported, he added. He also reiterated that Nissan would launch three more products from the facility. Renault, he said, would bring out three CKD (completely knocked down) products. The Oragadam plant, he said, had built-in infrastructure to produce 400,000 cars.
“You can’t compete in India by importing cars,” he asserted. The strategy had to be “source locally and make locally,” he pointed out. The Oragadam plant would roll out Mirca car, which fell in ‘B plus’ segment. Mr. Ghosn said there was room for many products below the Micra segment. The alliances with Bajaj Auto and Ashok Leyland were precisely aimed at filling up this space, he said. In this context, he said 50 per cent of the Indian market comprised cars that fell below the B segment. In the developing countries too a significant percentage of cars fell in the below B segment, he added.
To a question on the proposed ultra low cost car with Bajaj Auto, he said, “It is moving along. We are negotiating the contract.” He made it clear, however, that the ultra low cost car would not be made at the Oragadam plant.
Mr. Ghosn said “you have to be full player” if Renault Nissan Alliance had to play an important role in India.