Friday, June 15, 2007

Renault to develop small cars

French auto major Renault is looking to develop a $3,000 small car for emerging markets, including India. If the car is produced at the proposed Chennai plant, it will be sold by Renault’s Indian JV Mahindra Renault, and will be rolled out as a Mahindra Renault product.

The Chennai plant is being jointly built by Renault, Nissan and Mahindra & Mahindra (M&M) in a three-way joint venture. The low-cost car will take on Tata Motors’ planned Rs 1 lakh vehicle.

M&M auto division president Pawan Goenka said, “When we extended our agreement beyond the Logan to cover the new plant, it was decided that all Renault products made in Chennai will be sold as Mahindra Renault models and distributed through that JV, like the Logan.” He, however, refused to comment on whether M&M’s agreements with Renault cover the $-3,000 car as well.

The sub-Rs 1.5 lakh segment has been generating considerable interest ever since Ratan Tata announced that Tata Motors would make a Rs 1 lakh car. The company is putting up a new plant in Singur in West Bengal and is currently freezing its vendors for the project. The car is expected to roll out in 2008.

The Tata venture has already elicited interest from other auto companies. Two-wheeler maker Bajaj is producing a concept passenger four-wheeler which will be on display at the upcoming Auto Expo.

Other two-wheeler companies are also reportedly interested in similar projects. Analysts say a car in that price range will help convert two-wheeler upgrade hopefuls and dramatically increase the potential of the car market.

Mahindra Renault chairman Sylvain Bilaine, when contacted, said that “at this moment, we have no comments to make.” Renault sources say that the French company is currently closing negotiations over the Chennai plant investments and so far, there are no concrete joint product development plans with M&M. “However, discussions could be at a very early stage,” say sources.

Vendors, however, say the signs are already visible. So far, Renault has been talking about developing engines in India and sourcing locally for the project. But their choice of engine displacement is interesting. “Renault has been talking about a four-cylinder diesel engine in the 1.3-1.6 litre range which can easily be strapped on to a small car to qualify for local excise benefits,” said an auto industry source.

Renault’s search for a lower-than-Logan vehicle was articulated by its chairman on his trip to India earlier this year. On his visit to India, Renault chairman Carlos Ghosn had commented on the need to address the “unmet requirements” of consumers for a basic low-cost car.

Source:- TimesNow