Renault-Nissan to launch low-cost car in India

After the Logan, the Renault-Nissan combine are working on an all-new low-cost car for which they plan to partner with an Indian company, said Renault CEO Carlos Ghosn in an informal chat with journalists in Nasik, after inaugurating the assembly line for Logan.

'We are looking for another low-cost car like Logan, and it would be difficult to build a successful low-cost car without an association with an Indian company. We can gain a lot from their skills in frugal product planning and frugal engineering,' he said. ''The objective is how do we make a low-cost car, and still make a profit,'' Ghosn added.

Renault-Nissan could tie-up with Mahindra & Mahindra, with which it has formed a joint venture to launch the Logan in India, or other automobile companies like the Tata Motors, Bajaj Auto, Ghosn indicated here. ''There is no point re-inventing the wheel,' Ghosn said, adding, 'we want to bring frugal cars…and to achieve your goal, you need to have partners who are best-in-class (in costs).'

A new low-cost small car should not cost for than $2,500 - $3,000 for a market like India, and such a car is best engineered from scratch here than bringing a car from Europe and trying to change it, he said.

The Chennai plant, which will make 4 lakh cars a year in a three-way a joint venture between M&M, will start with two small car platforms and initially just export these cars, said Ghosn who's also the CEO, Nissan, in which Renault owns a 44 per cent stake.

This $900 million, which will be up by 2009, will also produce the variants of Logan. But Renault's two joint ventures in India could chart their own course in the market. ''The two companies will have independent marketing and channel strategy. It's better to keep them separate to avoid confusion,'' said Ghosn.

Renault is working on a hatchback version of Logan, said Sylvain Bilane. Also, the French auto-maker plans to outsource 12 types of auto parts like forgings and stampings from India, said Sylvain while chatting with journalists over lunch. Sourcing from India could be 30 per cent cheaper than what these parts costs in Western Europe, said Ghosn.

The new plant for Logan in Nashik (there's a new body shop and assembly line), in which Mahindra Renault is investing $700 million, is likely to break even in its second year of operations. 'I am told we will break even at a 30,000-32,000 cars. 2007 could be a profitable year,' said Ghosn.