“We want to make sure that whatever we do in India, we do it right” | business | Hindustan Times
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“We want to make sure that whatever we do in India, we do it right”

business Updated: Nov 12, 2009 13:19 IST
Renault-Nissan

As the world’s third largest auto player the Renault-Nissan alliance has had a successful run globally. But its presence in
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Carlos Ghosn Interview I

Carlos Ghosn Interview II
India has been on the fringes at best. President and Chief Executive Officer Carlos Ghosn intends to reverse that. His plan to make a ultra-low cost car in collaboration with Bajaj Auto Ltd. could just be the beginning of shape of things to come. In an exclusive interaction with Hindustan Times, Ghosn spells out his outlook and plans for India.

You have articulated what you’ve been saying all along, small cars, least expensive…seems like a big, big vision statement from you?
I understand that the media was a little impatient. And I’m told that the length of time it was taking was a sign of trouble, which it was not. It was a sign of really making sure that we had a solution that both partners agreed was is best one. The roles and which party will be doing what have been clarified and I’m taking this opportunity of being in India to make sure we have clear statement about how our collaboration with Bajaj ill be going. And hopefully this answers a lot of questions coming from the media and for us its answered a very important question about what is our entry point into the Indian market.

What exactly would each partner do?
Design, engineering and manufacturing of the car will be mainly Bajaj’s responsibility with the support of the Renault Nissan alliance. The marketing and sales side in and outside India will be our responsibility with the support of Bajaj.

Isn’t it a risk to tie up with a company that has primarily been a two and three wheeler maker so far?
They’re not doing it alone. They’re doing it with our support. Bajaj has skills and a mindset that we don’t. Which is what I call frugal manufacturing, frugal engineering that is absolutely essential for the success of a product like this. We obviously have the knowledge and experience of how to make cars but we need, in order to be successful, to have a team of engineers and team of product planners that are passionately designing to cost. If you don't do that you are not going to be successful in delivering what we hope will be the lowest price and the lowest running cost product. So we’re going to need intense work, intense focus in order to be successful and we think the plan is very good.

Would there be any financial participation by Nissan in the product delivery stage?
Obviously, I mean there is a logic for this. If we put in investment at the beginning there is no depreciation at the end and if we don’t put in investment there will be depreciation at the end.

You haven’t sold a car on your own in India, you don’t have any marketing network. Yet you want to take the responsibility of marketing the proposed ultra low cost car in a market that is very competitive and very different. How confident are you that you can actually deliver on that front?
To be confident you have to establish a partnership with Indian distributors. We are hiring Indian dealers and our partner (Bajaj Auto) knows the Indian market very well. We’ve already been working in the market. So I don’t think it’s going to be Nissan who is going to bring the expertise. Nissan has knowledge about marketing, has knowledge about best practices, has knowledge about what’s been done in other countries but I agree with you that when you come to India, you want to market and sell in India you need to do it with people who know India very well. The decisions are not made yet about how we’re going to market and sell our products but it’s going to be done with people who have expertise on the Indian market.

There has been intense speculation about your tie-up with Mahindra & Mahindra to manufacture and market Logan in India. What have you learned from that experience?
The Logan is a good car. All the people who bought the Logan in India are very satisfied with it. The only problem we have, and this is not a customer problem, is that the sales of the Logan is not at a level we’ve been expecting. And we were trying to understand why Logan has been such a big success in Russia, in eastern Europe, in north Africa, in Brazil. And why in India, where there has slowly been dip in sales. We are addressing this situation … we have plans to revamp the Logan

Was Logan a marketing failure, or was it just not right product for the right market?
It’s not failure. A car is a failure if it’s a problem for the customer who bought it. But all the surveys show that people who bought the Logan are happy with it. Where we are disappointed is that we thought we would be selling more cars. That’s the point. We thought that more customers would come to the product. When you have a situation like this you need to compare ok how do you deal with your expectations and compared to your expectations what is your reality and what’s not matching. Maybe your expectations were wrong. Ok maybe your prognosis is not right. So, this analysis is being made with Mahindra because they have the knowledge of the market. Let’s not forget that this car is being sold through the network of Mahindra with people who know exactly what’s going on, what customers are asking for. So we are working with them to understand. For me, what’s important is that our strategy in India is a long term strategy. It’s not about being successful in one car or being successful in one year. This is a market that’s going to be one of the largest markets in the world, and we want to make sure that whatever we do, we do it right. Globally Renault-Nissan have a market share 10 per cent. In India, it’s less than 1 per cent. We would want to reach the same share in India as we have globally.

In the past year or so more small cars are being sold in the developed world than ever before. How will this shift affect the profitability of automakers?
Small cars are not by definition unprofitable. Carmakers did not think that it was absolutely necessary and crucial to make small cars profitable. All those dealing with small cars are very profitable but others did not think it necessary to build their profitability around small cars. But now that everybody is getting conscious about the fact that small cars are a very important part of the picture, particularly because most of the growth is going to come from emerging markets... carmakers are going to have to get back to the drawing board and ensure that every single small car they build is going to be profitable. That’s one of the reason why we’re building our ultra low cost car in collaboration with Bajaj.

As a potential competitor what is your assessment of Nano and other low-cost cars from Tata?
I don’t talk about competitors. I was the first one to say when the Nano was announced who took the Nano seriously. I think it is a good concept and it corresponds to a need especially in a developing market. I am not taking it lightly.

Is the ultra low cost car being made in collaboration with Bajaj your version of the Nano?
Too early to say. You’ll see when you see the product. I think it is going to be a different product from the Nano but it will address the same concern, low price point and a much better fuel consumption than anything in the market today.