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

Mint Asia ST - - News - BMY ALYABAN G HOSH

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

BENOIT TESSIER/REUTERS

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.

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