Renault to make India export hub for EMS, source parts from local suppliers
Renault may source about 95% of parts for future products in India from local suppliers, especially in the mass market segment
Encouraged by the success of the Kwid small car in South Africa and Latin America, Groupe Renault plans to make India an export hub for emerging markets (EMS) such as Africa, Middle East and Latin America.
Renault plans to source more than 95% of parts for its future products in India from domestic suppliers, especially in the mass market segment, said a senior company executive at the Paris motor show.
The strategy is part of Renault’s aim to sell its vehicles at competitive prices in its quest to double its market share in India to 5% by 2021 while also developing suitably-priced products for exports, the executive said on condition of anonymity.
The Kwid currently has a localization component of 96% though it is lower for other products such as the Duster sport-utility vehicle (SUV) and the Lodgy multipurpose vehicle.
The executive said India has the potential to become a exports hub since the Kwid has been a resounding success in markets like South Africa and in some South-east Asian nations.
“Apart from Kwid being a success in India, as a company, we are enthused by the demand in the emerging markets. Also, in continents like Africa and other emerging markets, the behaviour and choice of the local people are quite the same. In South Africa, the demand for Kwid is phenomenal and we should try to replicate the success in the future,” said the executive.
To achieve its goal of doubling the market share, the company plans to introduce two new mass market models over the next two fiscal years, said Sumit Sawhney, managing director of Renault India Pvt. Ltd.
He said the company will introduce innovative products in the future and the strategy is how the company can leverage the country as a hub for exports. “With the emerging market products like Kwid being highly acceptable in Africa and Latin America, it is clear that these markets are very sensitive about price and cost of ownership,” said Sawhney.
In the domestic market, however, Renault has been witnessing a substantial decline in sales due to increasing competition from other manufacturers.
Also, sales of Kwid have weakened due to overall decline in sales of mini or small cars. In addition, demand for the new model, Captur, also remained subdued.
Sawhney said the company is still in a portfolio development mode and is trying to increase its vendor base.
“India strategy is very clear and it is a very important market, we started with only one design centre in India and now we have got two. We have probably the biggest engineering centre in India which may not be the case for a lot of other manufacturers. We used India to develop our supplier base,” said Sawhney.
“Kwid alone had more than 400 suppliers and now we are using India to export that car. Now we have new cars in the pipeline which will have strong focus on India. The next products will also have high localization and as long as you have 95% localization it is fine,” he said.
The writer was in Paris at the invitation of Renault India.
To achieve its goal of doubling the market share, the firm plans to introduce two new mass market models
Innovation centre: Renault’s EZ-GO at the Paris auto show last week. The auto maker will roll out innovative products in future, said Renault India managing director Sumit Sawhney.