After Logan launch Nissan-Renault plan low-cost car for India

Mumbai: Close on the heels of Renault-Mahindra launch of the Logan, the Renault-Nissan combine is working on an all-new low-cost car for the Indian market.

The two will partner an Indian company, Renault CEO Carlos Ghosn, who's also the CEO of Nissan, in which Renault owns a 44 per cent stake, told journalists 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 itself or other automobile companies like the Tata Motors or Bajaj Auto, Ghosn said. "We want to bring frugal cars…and to achieve your goal, you need to have partners who are best-in-class (in costs).

"It's possible we could work with Mahindra on a low-cost car. We will always talk to Mahindra on options," he said.

Ghosn said sourcing components from India would be significant, as costs here were about 30 per cent lower than in Europe or Japan.

Ghosn reiterated Renault had not made a decision yet on using Nissan's plants in Pakistan and Indonesia, and that it was "very probable" it would use the Nissan plant in South Africa.

A new low-cost small car should not cost over $2,500-$3,000 for a market like India, and such a car would be best engineered from scratch in India than bringing it from Europe and trying to adapt it to local conditionsit, he said.

The Chennai plant, which will make 4 lakh cars a year in a three-way joint venture between Mahindra, Renault and Nissan, will start with two small car platforms and initially just export these cars, said Ghosn.

This $900 million plant, 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.

The new plant for Logan in Nashik (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 30,000-32,000 cars. 2007 could be a profitable year," said Ghosn.

Ghosn said he was optimistic that the French carmaker's joint venture with India's Mahindra and Mahindra would be profitable in 2008.

"Not right away, but we are optimistic that the venture will be profitable in 2008 (calendar year)," Ghosn said..

Renault's Logan sedan, which marks its first foray into the fast-growing Indian market, is being produced at a Mahindra plant in Nashik, which can roll out 12 vehicles per hour.

Ghosn said he estimated the venture could break even with sales of 30,000-32,000 cars.

The Logan is also being made in Iran, Romania, Russia, Morocco and Colombia, but India is the first in which the right-hand drive version is being produced.

The car will also be made in Brazil.

"India is a key market for Renault both in the case of Renault Commitment 2009 -- which has set a target of 800,000 additional new cars sold worldwide by 2009 -- and beyond that," Ghosn said, adding " India is going to be a very big market for us beyond 2009."