French car maker Renault SA, which posted a $3.8 billion loss in the first half of this year, has decided to use the compact car platform of its partner, Nissan, to launch its compact car in India.
The move will help the beleaguered company sell compact cars in India without incurring huge product development expenditures. Instead, both cars will be manufactured at the Chennai plant that is under construction and will have common production lines and component sourcing facilities.
Renault and Nissan's decision to launch their own compact cars is independent of a tie-up with Pune-based motorcycle maker Bajaj Auto to develop a low-cost car that is expected to debut in 2011. A formal joint venture agreement is yet to be signed among the partners, though work on the small car is progressing at a slower pace.
This will mark the first time in India that two manufacturers are using a common platform for two or more new cars for the same market.
Nissan is readying to enter the 8,85,000 units a year domestic compact car segment with the launch of a five-seater compact car by the middle of next year and plans three products from the same platform by 2012. Renault India will use the platform of the same car to launch its own vehicle, which could either be a sedan, a compact car or both.
Renault SA, France's second largest car maker, owns 44 per cent in Nissan Motor Company, Japan's third largest car maker, and the Japanese giant owns 15 per cent in Renault.
The two companies, through their India subsidiaries, have created a joint venture Renault Nissan Automotive India which will operate a 400,000 units per year plant in Chennai at an investment of Rs 4,500 crore (Rs 45 billion).
Kiminobu Tokuyama, managing director and CEO, Nissan Motor India, said, "As an alliance we have agreed that Renault will commonise and utilise our newly developed compact car platform for their car that will be produced at the Chennai plant."
The Renault-badged car will not only employ Nissan's small car platform but will also consider using the engine and transmission fitted in the Nissan car, with alterations done to power output. Although Tokuyama declined to discuss its engine plans but confirmed that the joint strategy with Renault may extend to engines too. "We can tune the same engine with different power, character, performance and concept....it all matters how we use the engine, it's quite possible and normal overseas," he further added.
Experts say the move does not mean India consumers will have to choose between two similar cars from two different manufacturers.
"Using the same platform does not mean similar-looking vehicles. Maruti Suzuki Ritz and Swift, Mahindra Scorpio and Xylo, Maruti Suzuki Zen Estilo and Wagon R, Honda City and Jazz share platforms but are completely dissimilar vehicles," said an auto expert.
