After burning his hands with The Failure of Logan, Carlos Ghosn is again Grappling with Issues related to his ultra low-cost Car Project with Bajaj Auto. While The Automotive veteran has been able to turn around The Fading Fortune of Renault-Nissan globally, his India Journey has been full of hurdles so far.
When Renault opened its India office in 2005 in the financial Capital Mumbai, its intentions were clear – forge a JV with Mahindra to become a part of the growth story in Asia’s second-fastest growing automobile market. Analysts then opined that it would herald the beginning of an era in which French carmakers would soon come to dominate the Indian market, pushing aside the American and Japanese who had been running the show till then.
Mahindra Renault’s Logan attracted decent numbers in the early months but the high price of the product failed to hold customers in the showrooms for long. Within just six months into the launch, the product was lagging way behind its counterparts in the entry-level sedan segment. The product sold just 351 units in March 2010, a month before Renault opted to move out of the JV. Clearly, the Rs.7-billion JV investment was not working as planned and the ‘Indo-French’ car failed to meet the expectations of the JV partners. However, the failed attempt did not dampen Carlos Ghosn’s (CEO, Renault-Nissan) ambitions to strike gold in the Indian automobile market again. At the time when Logan was struggling (“Logan failed to deliver mainly because of its high price point” said Alex Mathew, Head – Research, Geojit BNP Paribas), Renault had already inked a deal with Bajaj Auto for the Ultra low-cost car (ULC) project and was confident of making a breakthrough in the domestic circuit taking this route. However, to Ghosn’s woes, that project too has been mired in trouble in the recent past.
It may be recalled that the project was already running behind schedule even as Ghosn was in India last year to discuss the branding and production plans for the product with Bajaj Auto’s Managing Director Rajiv Bajaj. The Renault-Nissan chief might have wished that his visit would bring to an end the controversies surrounding this ambitious project, but that has surely not been the case. In fact speculation surrounding the car has only deepened further with Bajaj saying recently that Renault has still not made up its mind on the matter of branding and the company (Bajaj Auto) will be selling via its own distribution network, if required (“We will never partner with someone who has the right to walk away. We will sell it through our network if they are not happy with the design,” Bajaj said). On its part, the Renault management is of a view that it will finalise its decision only after examining the car developed by Bajaj Auto. “We will take a call on the Bajaj ULC only after we see it and are confident that it will fit the needs of the Renault brand,” said the spokesperson of Renault India.
Mahindra Renault’s Logan attracted decent numbers in the early months but the high price of the product failed to hold customers in the showrooms for long. Within just six months into the launch, the product was lagging way behind its counterparts in the entry-level sedan segment. The product sold just 351 units in March 2010, a month before Renault opted to move out of the JV. Clearly, the Rs.7-billion JV investment was not working as planned and the ‘Indo-French’ car failed to meet the expectations of the JV partners. However, the failed attempt did not dampen Carlos Ghosn’s (CEO, Renault-Nissan) ambitions to strike gold in the Indian automobile market again. At the time when Logan was struggling (“Logan failed to deliver mainly because of its high price point” said Alex Mathew, Head – Research, Geojit BNP Paribas), Renault had already inked a deal with Bajaj Auto for the Ultra low-cost car (ULC) project and was confident of making a breakthrough in the domestic circuit taking this route. However, to Ghosn’s woes, that project too has been mired in trouble in the recent past.
It may be recalled that the project was already running behind schedule even as Ghosn was in India last year to discuss the branding and production plans for the product with Bajaj Auto’s Managing Director Rajiv Bajaj. The Renault-Nissan chief might have wished that his visit would bring to an end the controversies surrounding this ambitious project, but that has surely not been the case. In fact speculation surrounding the car has only deepened further with Bajaj saying recently that Renault has still not made up its mind on the matter of branding and the company (Bajaj Auto) will be selling via its own distribution network, if required (“We will never partner with someone who has the right to walk away. We will sell it through our network if they are not happy with the design,” Bajaj said). On its part, the Renault management is of a view that it will finalise its decision only after examining the car developed by Bajaj Auto. “We will take a call on the Bajaj ULC only after we see it and are confident that it will fit the needs of the Renault brand,” said the spokesperson of Renault India.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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IIPM: Indian Institute of Planning and Management
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age WomanIIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
