Renault and Nissan are writing a new chapter of the alliance in India, said an excited Ashwani Gupta, COO, Nissan Motor Company and Representative Executive Officer and Member of the Alliance Board.
The “first chapter began about 15 years ago”, he said, when both entities signed an MoU with the Tamil Nadu Government to set up Renault Nissan Automotive India (RNAIPL) to manufacture cars and Renault Nissan Technology Business Centre (RNTBCI) to pursue R&D, matching the global alliance agreement. It became the first partnership of the alliance to set up a manufacturing facility in the world.
Now, Renault and Nissan have decided to enter the next phase of their partnership in India, as a follow-up to the announcement made a couple of weeks ago, where both entities agreed to retain a 15% cross-shareholding.
Under the new framework agreement, RNAIPL will move to a structure that will see Nissan own 51% of the entity, while 49% will stay with Renault. In comparison, Renault will hold 51% in RNTBCI, with Nissan holding the remaining 49%.
The future for Renault and Nissan’s India operations was outlined today at an official ceremony in Chennai by Gupta, in the presence of MK Stalin, Chief Minister of Tamil Nadu, and officials from the State government.
According to the company, the current set up will reinforce the long-term partnership and empower the joint ventures with more responsibility and autonomy. Gupta observed that both entities had garnered expertise from the Indian market, and today, they are combining their strength with the growth potential of India.
According to Gupta, the change point is the shift in the alliance’s approach from looking at global models localised in India to the current localised models from India for the global market. As he put it, it is no more localisation of global products; instead, to create value using innovative technologies encompassing electrification, safety-assist and connected & digitalisation.
Achieving Growth Potential Together
Talking about the company’s strategy for the alliance, he said next to the established markets, the growth potential is in India, Latin America, Africa and the Middle East. Talking about India, he said that before 2018, the alliance would have gone for big investments to shore up volumes, which was the objective then. Now, the strategy is shifting towards achieving growth potential together, which means that volume will be the consequence, not the objective.
The first pillar of the new alliance (Renault, Nissan and Mitsubishi) that it announced in London last week was about high-valued projects. Synergies are not for the sake of it but for the performance of each company, he pointed out. Now, “we want to expand our quality of sales,” he mentioned.
An initial investment of around $600 mn (INR 5,300 crore) is planned to support the new projects, which will include six new production vehicles for domestic and international customers. This will include two new fully electric vehicles, besides uplifting the RNTBCI into an international export hub.
The six new models will comprise three for each company, engineered and built in Chennai. They will be built on common alliance platforms, while retaining the individual, distinctive styling of the respective brands.
Today, Magnite, the B-SUV offering from Nissan, covers only 15% of the Indian market. As the company’s presence in A and C segments is nothing to write home about, it is looking at entering these segments with new offerings. Cumulatively, these three segments will help the company double its market coverage.
They will include four new C-segment SUVs for both entities. Two new A-segment electric vehicles will be the first EVs for both Renault and Nissan in India, building on the heritage and expertise of both brands in mass-market electrification, which began with the Nissan LEAF and Renault Zoe more than a decade ago.
The EVs, together with subsequent launches, will support Nissan in accomplishing its objective of achieving 44% of its product portfolio as EVs. The company has decided to launch electric vans in Japan that are deployed in last-mile delivery from Mitsubishi (brand). “Whenever we have priorities set, we will look at electric LCVs,” he noted.
Customers At The Core
“We do not start with platforms anymore. Before, we used to start with platforms or products,” as the alliance believed in having something in common. Now it starts with the customer followed by product and platform,” Gupta noted.
The new models will not only be confined to India but will also be exported, boosting plant utilisation to 80% from the current 47%. Complementing the additional production will be an increase in R&D and associated activities at RNTBCI, which is expected to create up to 2,000 new jobs, focusing on new Indian and international projects.
To a question on the break-up of exports and domestic market, when the capacity utilisation reaches 80%, Gupta said, “We do not want our sales people to be stressed that exports is 70% and domestic is 30%. We will be flexible. On the consequence, achieving 60:40 or 70:30 will not be a surprise, as we are developing LHD for Magnite and this will be exported to the countries where we are number one, with over 20% market share. We want to do the job on products followed by technologies. Starting 2025, we will ramp up.” The first launch will be in 2025, he asserted.
Guillaume Cartier, Chairperson, Nissan’s Africa, Middle East, India, Europe and Oceania regions, said, “For the first time, the Nissan line-up in India will reflect our global power in high-quality SUVs and EVs, bringing greater value to our employees, customers and communities.”
Also Read:
India On A Good Wicket Now For Renault-Nissan