The Renault smorgasbord

 MUMBAI: When Peugeot called it quits in India over a decade ago, it virtually marked the end of French interest in the Indian automobile industry. Renault’s entry in 2005 filled the void.

The company today has a 49:51 joint venture with M&M (Mahindra Renault Pvt Ltd) for the Logan, a 50:50 alliance with global ally Nissan that will see the commissioning of a Rs 4,500 crore plant in Chennai, and a three-way joint venture with Bajaj Auto and Nissan for an ultra-low-cost car that will roll out of a new facility in Chakan near Pune.
In addition, Renault and Nissan are in another equal-stake alliance for engineering, design and outsourcing of components.

Yet another initiative is an international logistics hub in Pune. Renault also has a satellite design centre in Mumbai called Renault Design.  That is not all.

The French automaker will market cars that it makes in Chennai through the Mahindra-Renault distribution network, which has the Logan sharing showroom space with Scorpio, M&M’s sport-utility vehicle.

Nissan, on its part, has its own retail plan for cars produced in Chennai. The marketing of the ultra-low-cost car will, in most likelihood, be managed by Bajaj Auto.
The Chennai plant’s business model is akin to a gigantic back-office production powerhouse, where costs and sourcing would be optimised with each partner  producing its own vehicles.

Even after M&M dropped out, there has been no change in the production estimate (400,000 vehicles annually), while costs have gone up by Rs 500 crore.

This is where, perhaps, a Bajaj Auto entry makes sense, even though Renault has denied any such development.

Simply, a third partner helps share the costs. Assuming Bajaj does step into the picture, it will quite likely insist on a quid pro quo which could be to seek Renault-branded cars to be co-sold with the ultra-low-cost car in showrooms.

This way, the Tata Nano’s challenger gets a brand build-up, but then such a move would affect Renault’s retail pact with M&M.

Renault insists that it has a firm plan in place for India despite setbacks.
It may also have its own challenges working with Nissan in India despite a global alliance.

Bajaj, likewise, represents another partner for another distinct product.
0The picture is still not complete because an alliance needs to be put in place for light commercial vehicles, too, even as partner Nissan has already sewn up one with Ashok Leyland.

A case of too many eggs in a basket, or a carefully designed multi-partner strategy? With the Renault-Nissan alliance, Carlos Ghosn has proved that cross-cultural gaps could be bridged.

The French auto giant is readying for an encore.