Carlos Ghosn, the CEO of both Nissan Motor Co. and Renault SA, said that a new and cheap car that the partners hope to build for India's booming small car market will not compete directly with Renault's Logan.
Ghosn added that Nissan and Renault were looking closely at the feasibility of building a $3,000 car in India in a venture with tractor and utility vehicle manufacturer Mahindra and Mahindra that would go head-to-head with Tata Motors Ltd.'s sub-$3,000 "People's Car" due for launch next year.
"Frankly, that's something that challenges us," Ghosn said last Wednesday. "These people are serious, we take them seriously." Such an ultra-cheap car "could have a big potential - bigger than India," he said.
Earlier this year, Renault began selling its popular Logan in India through a joint venture with local automaker Mahindra & Mahindra, but it is priced in a range of 428,000 rupees to 547,000 rupees. Ghosn said that Nissan and Renault are contacting suppliers in India and analyzing all aspects of producing the less expensive car. "If it makes sense, we'll be ready to start it," he said, but did not give a timeframe."
He added if the companies decide to make the car, they will make two cars from the same platform - one for Nissan and one for Renault. Nissan created an alliance with Renault in 1999. The upcoming cars will likely sport trusted parts like the , engines and stylish accessories but will be much cheaper.
By 2010, annual car sales in India are set to nearly double to two million, with small cars making up over two-thirds of the market. It can be noted that huge budding economies like India, China and Russia are the new combat zone for global automakers amid declining sales in aggressive mature markets.
"We cannot accept to be completely taken by surprise by somebody coming with a $3,000 car that could have a potential bigger than India. Nissan and Renault are working on it," Ghosn said. "One car manufacturer says it is to bring a $3,000 car to India next year and it is a challenge we take seriously. We will be ready when the car comes to the market, we will have enough information, research, discussion. Our obvious partner is Mahindra and we are working with them, but we have not finalized any agreement yet."
Ghosn said that the super low-cost car under study would not directly compete with the Logan that made its debut in India last month. Indian-assembled Logan cars cost about $9,840, while those made in Romania go for about $8,510. Logans are also built in Brazil, Colombia, Iran, Morocco and Russia. Nissan, Renault and Mahindra are building a plant in Chennai in southern India. The facility will be used to build 400,000 vehicles annually from mid-2009.
Ghosn said that Renault had no specific growth plans in Southeast Asia, as it was busy meeting global demand for the Logan. "Renault's commitment through 2009, which is based on very clear objectives, is not based on Southeast Asia. It is based on expansion in Russia, India, Eastern Europe and South America," he said. "But obviously we are not going to leave Southeast Asia for others, particularly where Nissan already has a strong presence."
The Japanese automaker's CEO has intimated his skepticism on Thailand's goal to develop itself into an export hub for small, economical cars in the same way it built a successful small pick-up truck industry. "When you come to smaller cars, you have competitors and the biggest are China and India. Thailand is not so obvious if it is to become a dominant exporter of small cars," Ghosn said.
