The Franco-Japanese alliance is all set to unveil an ambitious SUV line-up amidst fresh investments of Rs 5,300 crore in India.
20 Apr 2024 | 6551 Views | By Hormazd Sorabjee and Ketan Thakkar
It was a show of strength, a commitment to the Indian market and a celebration too. To mark the 25th anniversary of the Renault-Nissan Alliance, the global board made a historic visit to India. It was the first time that all three heads – the global CEOs of both the ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
It was a show of strength, a commitment to the Indian market and a celebration too. To mark the 25th anniversary of the Renault-Nissan Alliance, the global board made a historic visit to India. It was the first time that all three heads – the global CEOs of both the Renault and Nissan brands as well as the Alliance chairman – convened together outside of France or Japan.
The Renault-Nissan Alliance in India was set up in 2008 as Renault Nissan Automotive India Private Limited (RNAIPL) a 70:30 joint venture, with Nissan holding the majority. And in what was the first dedicated Alliance plant globally, it began manufacturing operations in 2010, at a new plant in Tamil Nadu. In the 15 years since, RNAIPL has sold 1.4 million cars from both brands in the domestic market and exported 1.2 million cars to over 100 countries. That’s an average production of around 1,75,000 cars per year, which, though considerable in absolute terms, is less than half of the plant’s annual capacity of over 4,00,000 units.
Whilst it has seen flashes of success with the game-changing Renault Duster and the disruptive Kwid that rattled market leader Maruti-Suzuki, it’s not always been an easy ride for the Alliance, which is now way off its peak of 1,92,000 units in FY2016-17 – the alliance exported 1.2 lakh cars back then. In the last financial year (2023-24) Renault and Nissan sold just 82,000-83,000 cars in India with exports a mere 46,000 units. Nissan, which was always the weaker of the two brands in India, is down to one model and Renault too is now struggling with an ageing product portfolio. What went wrong?
The arrest of Carlos Ghosn in 2018 dealt a significant blow to Renault-Nissan’s ambitions in India, a country Ghosn himself was a vocal advocate of. Ghosn’s abrupt departure disrupted the decision making process, weakened the Alliance’s cohesion and affected long-term planning and investment. Then came the COVID-19 pandemic, which forced auto manufacturers to re-evaluate their strategies and focus on profitable markets rather than throw good money after bad ones. Renault and Nissan too had enough fires to put out in their core markets, and high-risk, low-margin markets like India were less of a priority.
However, by overlooking the Indian market – which grew by 8.5% to 4.23 million cars in FY2023-24 – Renault-Nissan risks missing out on long-term growth opportunities. Despite its difficulties, India remains a tantalising prospect for Renault-Nissan and its attractiveness has been bolstered by the challenges faced in China, where the Alliance is losing market share.
The Renault-Nissan Alliance has also undergone significant restructuring, in the aftermath of Ghosn, to strengthen the collaboration between the two brands. Following the reshaping of the Alliance globally, the RNAIPL equity structure too was changed from 70:30 to 51:49 – with Nissan continuing to hold the majority. Whereas in the Renault Nissan Technology Business Centre — the R&D arm — Renault holds the majority of 51%.
Rebooted and restructured, the Alliance is ready for a fresh innings in India. “Don’t underestimate the strength of the Alliance worldwide. The automotive industry is full of cycles, and this Indian unit is in the middle of a revival cycle,” said Jean-Dominique Senard, the chairman of the Renault-Nissan Alliance. He added that in India the Alliance has huge assets and the group is “not just going to let them go away.”
Senard said that after reshaping the Alliance between Renault and Nissan, the group will now apply “a more flexible and local project-led approach” in India which will allow for “quick and agile decisions that suit regional requirements.” He also asserted, “We are obviously convinced that this approach will strengthen our long-term partnership and give our organisations much greater responsibility and autonomy.”
At the joint press briefing, Nissan and Renault both announced the development of four new products between the two brands. This includes two five-seater SUVs, one from each brand, and their respective seven-seater derivatives. The latter will take on other three-row midsize SUVs that include the Citroen C3 Aircross, Hyundai Alcazar, MG Hector Plus, Tata Safari, Mahindra XUV700 and others.
The Renault Duster and Nissan’s five-seater SUV will likely be launched first, followed by the seven-seater versions.
A teaser of the two upcoming midsize SUVs was released, with the two still in concept form. The SUVs will be based on the Renault-Nissan Alliance’s modular CMF-B platform that underpins a number of global models for both manufacturers, as well as Renault’s sister brand Dacia. These will be heavily localised for India.
While Renault hasn’t confirmed, we believe its CMF-B based five-seater SUV could revive the ‘Duster’ nameplate as it will be based on the all-new Duster that made its global debut in February this year. However, the teased images indicate that the India-spec SUV features some styling changes over the global-spec Duster, including redesigned headlamps as well as a restyled front bumper. The Nissan SUV boasts L-shaped LED DRLs that are connected together with a light bar running across the nose.
Engine options for all four SUVs from both brands are likely to be limited to a pair of turbo petrols. The base engine will be the HR10, the 1.0-litre turbo that powers the Kiger and Magnite, though it is likely that power will be bumped up in the bigger SUVs.
The HR13, a 156hp 1.3-litre turbo-petrol, which debuted in the now-discontinued Duster and Terrano, will make a comeback in the Renault and Nissan midsize SUVs. A 6-speed manual and CVT options are likely for both petrol engines. A 1.5-litre naturally aspirated petrol is also possible for the base variants but there are no plans to bring back the legendary K9K diesel. With the potential for hybrids looking stronger than ever, a hybrid powertrain is also being explored, though the cost of its development has not been factored into the project.
The Renault-Nissan Alliance has committed a fresh investment of USD 600 million (Rs 5,300 crore) for the development of the four SUVs that will come with a high level of local content to be cost competitive. In fact, it’s the localisation of the components that requires a long lead time, and hence, the first of the Renault and Nissan SUVs is expected to make its India debut by late 2025 or early 2026. The manufacturers confirmed that the products from the two brands will be introduced parallelly. Additionally, there are plans to introduce two more products, however there’s no confirmation as to what they could be. Sources say Renault evaluated bringing the Kwid-based Dacia Spring EV to India, but this project is likely to be dropped as it did not meet cost targets. Nissan, on the other hand, is exploring an electric version of the Magnite in India, sourcing electric components from its Chinese partner Dongfeng.
Compared to the investments committed by Maruti Suzuki and Hyundai for future products, Renault-Nissan Alliance’s spend for this project is pretty modest. However, the Alliance isn’t gunning for market share but is looking at building a sustainable business in India by being frugal and placing a few strong bets.
Luca de Meo, CEO, Renault Group claims that “India is not an easy market and everything is not pink. It is a very competitive market, there are many challenges and a lot of carmakers have had to bite the dust. On our side, we’ve proven that we are not shy and that we are ready to bet on India and work with all the stakeholders to build favourable business conditions. We are here to do the right job, and find our secret sauce and be more creative,” he added.
Exports will play a big role and give the Alliance’s operation enough scale. “There are rich assets that we enjoy in India, and by using them, we would like to use India as a hub for exports said Makoto Uchida, global CEO of Nissan Motor Corporation, adding that he is looking to export “at the level of 1,00,000 units” per year.
Re-entering the crowded midsize SUV market won’t be easy, but a clever mix of design, aggressive pricing and technology can help both Renault and Nissan win over customers. Renault disrupted the market with the original Duster. Can it do the same with the new one?
This feature was first published in Autocar Professional's April 15, 2024 issue.