Renault plans low cost car for India

Renault, which launched the Logan in a joint venture with Mahindra & Mahindra (M&M) has more in store for India. The French automaker has already committed itself to a greenfield production facility in Chennai by 2009 with an installed capacity of 400,000 vehicles per annum with partners M&M and Nissan.

A report in the French newspaper Le Figaro stated that the Renault is considering the launch of an ultra low-cost car costing less than $3,000 (Rs 1.2 lakh) for the emerging markets including India. The report stated that Renault would hire 1,000 engineers to bring the car out within three years. It added that the project would soon be discussed by Renault’s works council.

LOGAN EXPERIENCE

If this happens, it would even pip Tata Motor’s much-touted Rs 1 lakh car, which is its first attempt at developing an ultra-low cost car. However, Renault does have some experience in producing a low-cost car in the form of the Logan, which retails for $6,500 in eastern Europe.

The cheap sedan was Renault chief Carlos Ghosn’s tool to conquer emerging markets and help the automaker achieve sales of one million units by 2010. The Logan clocked huge numbers in eastern Europe when it was launched in 2004. It was produced at the Dacia plant in Romania, and since then production has also begun in Russia, Columbia, Brazil, Iran, Morocco and of course India.

Although Renault has entered the country a little late, the effort has not gone in waste. The Logan clocked sales of more than 2,750 units in the first month of its launch and has quickly emerged as a contender for the spoils in the lower end of the C-segment.

What is interesting to note here is that almost five decades ago the company had plans to launch a car for Rs 7,000 in collaboration with Mahindra. That plan never came to be. The proposed car may not be as low-cost as the still-born first effort, but it highlights Ghosn’s faith in India’s ability to produce low costs, high engineering automotive solutions.

“We do not know how to manufacture a $5000 car in Western Europe. Indian companies like Mahindra, Tata Motors and Bajaj are doing a wonderful job. Bajaj sells three-wheelers for $2,000 and I would lose my shirt if I tried to do that. Only an Indian company can do that,” he had said during the launch of the Logan in April. The new car, if it materialises, will ensure that the shirt stays on his back.