PARIS : "You cannot compete in India without producing in India," said Carlos Gohsn, President and CEO of Renault.

India is a booming Asian market. The Indian car market is growing at a rate of ten per cent annually. And it is important for Renault to be a part of this market, said Gohsn, while announcing the French car company and Indian automobile major Mahindra and Mahindra (M&M)'s second joint venture in India.

Furthermore, India will be playing a large role in Renault's "Commitment 2009" goal. The company aims at producing and selling an additional eight lakh units annually by that year. It is expected that India will contribute significantly to this.

In February 2006, Renault and M&M signed a joint venture to produce Logan, a mid-sized sedan, which is expected to capture buyers looking for a step above the small car such as Maruti's Alto and Hyundai's Santro. The Logan is expected to hit the streets by the second quarter of 2007.

The second joint venture will be the setting up of a greenfield plant, which will have the capacity to manufacture five lakh units of Logan and six Logan derivatives.

These cars will be largely for the domestic market but the possibility of export is not ruled out.

In addition to manufacturing the Logan, Renault will lend its expertise in areas such as technology and design. "We already have set up Renault Design India in Mumbai and have been closely following the trends and pulse in India," said Patrick Lecharpy, Vice-President, Advanced Design, Renault.

Renault is known to make an almost 80 per cent recyclable car. This kind of technological support will be extended to India. Although unwilling to give specifics as yet, Renault will also look at India for sourcing material for its products in future.

Renault along with its partner Nissan is among the largest car manufacturing companies in the world. Known for its ability to produce top quality small cars for the mass market, the company has in recent times created waves in the automobile industry by producing some radical looking cars in the small car segment and making a huge success out of it. The Megane, for instance, is very interesting and apparently very popular. The Clio and Twingo are the other two successful small cars.

In time, Renault says, it may bring in a premium small car. But the Indian small car market is fiercely price competitive and the company will have to work out a cost-effective way to bring in its cars.

While Asian car manufacturers have been in India ever since the market opened up, European auto companies seemed a little reluctant to come in having burnt their fingers in India earlier. Renault says times have changed and it is crucial now for it to be in the Asia-Pacific market.

Competitive advantage

India has an upwards of $7 billion auto market and it definitely want to be a part of it.

Mr. Gohsn also pointed out that Indian engineering was one of the reasons he believed the Indian venture would be very fruitful for them. Complimenting Indian engineers he said they were frugal and able to adapt very quickly. This would give them a competitive advantage.

An outstanding partnership

"It has been an outstanding partnership," said Anand Mahindra, Vice-Chairman and Managing Director of M&M. The second venture came sooner than anticipated which indicates that the two companies have achieved a compatible relationship. "We have come together with the plan of leveraging each other's strengths. There is no doubt this partnership is going to be extremely successful globally," he said.

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