[ajmat]

Team BHP was recently invited on the Renault Nissan Alliance Tour. It began with the Datsun launch which is covered elsewhere in the forum. It was then followed by a round table in Chennai with Mr Carlo Ghosn and his team. The next day we were taken on a very brief trip around the Renault Nissan Technical Centre and also the Renault Nissan Alliance Factory.

Objective of this tour was to understand more about the Renault Nissan Alliance operations and future India plans. Note - this thread will have very little pictures but a lot of data!

The Round Table began with an hour's address by Carlo Ghosn CEO of the Renault Nissan Alliance. On a personal note, I was quite impressed with his dynamism, his knowledge about what happens on the ground in his operations.



His comments on various topics are as follows:

Focus on India.

• India as a partner. Came initially to learn about the market as opposed to impose Renault products straight away. Mutual win-win partnerships were established, Some partnerships like those with Ashok Leyland flourished, some partnerships like those with Bajaj and Mahindra did not. A lot of questions were asked about these but the reasons were evasive beyond the fact that their respective strategies differed.
  
• Major investments in India $1 billion in a 100,000 cars / annum production plant and another $1.5 billion in in the technical centre.
  
• The technical centre is focused on developing platforms for high growth markets. All data is disseminated here
  
• Renault aims to provide the best value in each segment and not mere low cost. different products are perceived differently. The Duster is low cost in Europe but considered as a respectable middle class car in India and Brazil.
  
• Dacia brand will not come to India. Only for Europe and North Africa. Renault will not compete with Mahindra in the Logan space.

The CMF-A Platform Announcement

• The CMF-A platform was announced. This platform is being developed with partnerships with between local team and suppliers. It will be an all new platform and not a 25 year old amortised platform (an obvious reference to Maruti, Ford and GM!)
  
• The frugal engineering expertise in India is key for this. He referred to projects that he saw in Ashok Leyland that cost almost less than 10% compared to if Renault-Nissan undertook them.
  
• Using this platform, the Renault Nissan alliance will be aiming for a 15% market share in a "few" years. He refused to say when. This was a very open statement though.
  
• CMF-A will showcase Indian engineering and design and will be announced 2015
  
• Product positioning strategy will be to take lowest lowest price point in each segment and look at what better value can be given. It will be more modern than what is currently on offer.
  
• It will be exported to test markets abroad
  
• Expect at least 2 models to be based on this platform
  
  

Comment on Current India Market Scene

• Not a regression but a progression, opportunity exists, the current scenario is a small blip.
  
• Current Europe sales for Renault are similar to 1992. We might be lucky to see a recovery around until 2015, that too, a gradual one.
  
• Market penetration of automobiles in India is low. India is only 15 cars per 1000, China is 60, Brazil is 200, Portugal is 450 and the US is 800.
  
• India demands value - if you succeed here, you will succeed elsewhere but one needs to be modest about approach. Win-win partnerships are key.

[ajmat]

This segment of the presentation began with a initial address by Marc Nassif, MD Renault India who maintained that India is a fast track growth story for Renault and is now 11th largest market. That's quite amazing considering that it did it with mainly Nissan models, Duster excepted.

We were then take through the Renault story by the executive director marketing Sumit Sahwney (ex GM)

Renault has become the 8th largest company in 2 years. (however, the gap between 1st /2nd and 8th is massive!)

What Renault really looked into were the demographics

• 75% rural
• 50% less than 25 years of age - no other place in the world
• 22% middle class

Indian Society is rooted - people look for the best. The Renault brand in India is positioned that people should expect more of of life. It should be an accessible premium brand. Renault are very focused on the first time buyer. Price not the only factor. Indians do not want cheap, old products,

The following are the areas that Renault plan to leverage for for its brand positioning

• Design
• Innovation
• Quality
• Powertrain efficiency
• Design environment
• Eco - friendly

Renault claimed the following achievements:

Renault committed and delivered 5 products in 18 months. (The Duster was the main achievement, the mass market products are s dependent on re-badged Nissan products - but they do not mention this!)

• In terms of dealers, from 7 partners to 35 partners with almost 100 outlets in two years. Renault are currently focusing on expanding dealer network. This is key to gain 15%.
  
• Duster had 36 specific changes for India (I will discuss this in a separate thread)
  
• K9k dci engine - second best selling diesel engine in India
  
• Only manufacturer to offer 4 yr warranty

In terms of sales, the sales figures are as follows:

2011 - 1400 cars
2012 - 35000
2013 - 70000 (estimated)

This has led to a 2.6 % market share

The products cover 37 % of the market segment and span 85% of India's market reach.

Renault 2013 priorities

• Drive Renault brand to greater heights
• Increase accessibility to customer
• Improve customer satisfaction

The products will share different platforms and sub assemblies as long as customers are happy, not confused

During the question and answer session, we asked a lot of questions about the brands cannabalising each other. The response was that Renault is more compared with Fiat, VW, Ford etc and Nissan is compared to Toyota and Hyundai.

The management claimed that the Scala/ Pulse carry Renault brand values. That got to me, so I challenged them that if you are so confident, would you sell these products in Europe as Renaults. They then backtracked and admitted that these models were developed on a limited budget to fill the India product line. Brand value is being focussed more on the experience than the product. If they really mean this, they need to do something really special.

[ajmat]

The next presentation was by

Toru Hasagawa, Corp. Vice President, Africa, Middle East and Europe

Nissan Global Update

• They have a Power 88 strategy - i.e. Enhancing sales and brand power 8% market share by 2016 and 8% growth
  
• Nissan is aiming for sales of 5.5 million vehicles and are on track
  
• They plan to achieve this via a 6 pillar approach:

-Brand power
-Sales power
-Enhancing quality
-Zero emission leadership
-Business expanson
-Cost leadership

FY2007 sales ratio for high growth market was 40% and mature markets was 60%. This ratio is now reversed.

Production in India

2010 2 lakhs
2012 4 lakhs
2016 >5 lakhs

Localisation Targets

2012 88%
2013 94% targeted
2014 97% targeted

All engines will be 80% localised by 2014 ( currently 60%)

Exports

• 127000 Micra's exported
• $365 m parts
• Nissan is India's second largest automotive exporter

India Market Strategy

• The focus is on the B, B+, B sedan, SUV, MPV segments. This will cover with 96% of the India market segments
  
  2016 growth projections will be
  
  • B Hatchback is 44%
  • B+ Hatchback is 12% (line between B + B+ is fuzzy)
  • B sedan is 30%
  • SUV is 34%
  
  Next Micra will be made in France so most capacity will be taken up by the Datsun brand
  
  2013 will see three new models. 2013-2016 will see 7 new models ( 4 Nissan + 3 Datsun). 2018 Target is 10% of the market split equally between Nissan and Datsun
  
  Parts warehouse to expand from Chennai to Haryana and Maharashtra
  
  Current 95 dealer to expand to >300 by 2016
  
  Drivers for expansion in India are:
  
• Continuous Prod Introduction
• Datsun Brand
• Accelerated network
• Increased manufacturing capacity

Nissan and Datsun will share same dealer network but actual code of operation will be defined

Nissan reluctantly admitted that the Hover is not working well. They are learning a lot but expansion is on track despite this. At this point, the replies were evasive but we understood Nissan and communicating directly with dealers to resolve issues.

We were then treated to a presentation by a leading anaylst Michael Dunne. His presentation warranted a separate thread

[ajmat]

We were taken to visit the RNTBCI in Mahindra World City. We did not get a tour of the the facility as such. We were confined to the cafeteria and various presentations were made.

Note: We were shown a lot of presentation material but since they were labelled confidential, I can only share my notes based on this

An over view of RNTBC

This is the only joint technical centre between Renault and Nissan. It is used to extract synergies of the following

• Talent Pool
• Supply Base
• Plant and the Port
• Local universities for research

It started with 1000 employees in 2008 and has close to 3950 employees.

70% work in R&D
10% in IT
5% in the BPO

Average age of the employees is 29 years. Only 3% are expats. 23% are freshers, 20+ have 10years + experience., hence if you are a youngster looking for a car design career, you can look in over here!

The research and development work on two areas, - Digital CAD and Physical Validation. It initially begin with the physical validation of the Nissan/ Renault models that we see. A lot of the digital CAD began with the cost savings and localisation of the k9k engine and the new Datsun GO

We were then taken through some presentations on

• How the Duster was adapted for India
• How the K9K engine was localised
• Presentation on the CAD design for Datsun Go

[ajmat]

Renault first did a lot of research on the Indian Market. They understood the following

1. Driving Environment - Fuel, Bad Roads, Crowded Roads
2. Customers - Status was more important than functionality
3. Competition - Competition was dynamic (Read impending EcoSport)

The project scope for adapting the Duster was as follows

Exterior - Add more chrome and make it look up-market
Interiors - More upmarket feel
Premiumness - Rear seat comfort
Dynamic - Ride and handling over bad roads


Exteriors - The larger chrome grille on the front, the rear number plate embellishment as well as symmetrical rear lights are the outcome of this as well as extra badges to define the trim levels.

Interiors

A lot of work was done on this. The following changes were made

• Front interior door handles
• Chromed air vents
• 2 DIN stereo provision
• Dual tone beige interiors
• Split turn indicator on instrument cluster ( i.e separate arrows for left and right)
• Gradually retracting steering adjustment
• Easier pressure on horn pad
• Bonnet release on right
• Illuminated window switches

Premium-ness

This focused on the rear seat comfort. Some specific India features include

• Solid rear parcel shelf
• Revised rear seat angle
• Faster rear A/C cooling
• 2 rear reading lights.
• Front passegner seat adjusters are accessible from the rear to adjust from the back (VW do it better!)
• Arm rest with rear cupholders
• "Frugal" additional storage - bands to store items
• Rear electrical socket

Ride and Handling

The European spec Duster is oriented in the following priority

General handling
1: High speed cornering
2: Steering effort
3: Braking -Wet and Dry
4: Durability
5: Ride comfort
6: Road camber effect

For India, the ride and handling is optimized in the following order

1: Ride comfort
2: Braking -Wet and Dry
3: Durability
4: Steering effort
5: Road camber effect
6: General handling
7: High speed cornering

Based on these inputs, Renault have scored with a winner. However, the Ecosport and other forthcoming rivals poses an interesting challenge.

[ajmat]

The K9K engine is made in 3 facilities globally and powers 26 Nissan/ Renault Models.

It is the second largest selling engine in India. (considering they have only one plant as opposed to Maruti/Fiat/GM - having three facilities to manufacture the same engine, fixed costs are much lower.

• Localisation did not just look at costs, it also looked at local driving conditions, local material and local manufacturing processes
  
• Partnered with both local vendors and Indian subsidiaries of International companies
  
• Key example was the oil pan - thickness was optimized using the CAD processes. They took account of local grades of raw material. This contributed to a 6% reduction of engine mass.
  
• Air Filter is adapted to our dust conditions
  
• Turbocharger shaft welding adapted to what is available in India
  
• Engine is already >90% localised

So if you are wondering how the Nissan Active is price competitive - now we know!

[ajmat]

We were taken to the plant for a quick visit. Our movements were limited to very few places and picture restricted (may be there were a few Terrano's and Qashqai's lurking around)

Some facts about the factory

• First ever joint Nissan Renault plant globally
  
• Starting out on a frugal manner - only 14% automation
  
• 2.6 millions squre meters. Half the size of the Yokohama plant
  
• 2 production lines with a capacity of 400,000 cars per annum each
  
• Line 1 does the Sunny/Scala, Duster/Terrano, Evalia/Stile
  
• Line 2 does the Micra/Pulse, Sunny, Go (planned), and the CKD - Fluence/ Koleos/Teana
  
• Till date - 455000 cars have been made or which 173000 have been sold in India
  
• 60% of supply based is based within 300km of the plan. Remaining 40% are in Mumbai/ Pune and Delhi/Haryana
  
• Parts exports set to double with the Datsun Go production beginning next year

We were then taken around to three areas

1: Body in white - we saw no automation, panels were hand welded together



2: Final assembly - Dusters and Sunny's were being assembled on the same line. Most Sunny's were left hand drive for export. The sequence seemed to be 2 dusters and then a Sunny





3: Engine shop : No pics were allowed - again very little automation

The basis of production here has been on keeping things frugal and flexible - low automation and high localisation

Disclaimer - Team-BHP was invited by Renault Nissan Alliance for the tour. All travel and lodging expenses were paid by them

[vishnana]

Thanks for the great insight , though for RNAIPL , Renault Nissan Alliance India Pvt Ltd suits well , it is Automotive India in place of Alliance India - . Did you hear anything about possible new line or plant itself for their A entry car ranges planned from 2015 ?

[ampere]

Great notes Ajit.
My only take: We may not see more utility vehicles from the Renault stable.

But looks like a modest realistic approach from the house of Renault-Nissan.

[Achyuth Vaibhav]

It looks like Mr Ghosn is more of a Renault man rather than Nissan. Even the production of the cars tell us the whole story. Were any other additional cars spotted? For instance we may see any new model Nissan is contemplating (Terrano). Also, how is the manufacturing quality of the factory?

Thanks for the valuable insights.

Cheers,

Achyuth

[MaxTorque]

Good report. Liked the way you asked the question regarding Renault Pulse and Scala. I was wondering how you could spot the updated Renault Fluence in factory premises. Now I got the answer.

A small clarification. Can you verify the export volume figure of Nissan Micra? I think it's not a correct figure.

Originally Posted by ajmat

Exports

• 1270000 Micra's exported
• $365 m parts
• Nissan is India's second largest automotive exporter

[Balaji31582]

Having more than one location for spare parts is a good idea. But they should take a cue out of what happened to maruti/tata and just move to Gujarat. No offence meant to any of the fellow members who belong to the mentioned places. Its just my humble opinion

[shinuak]

Good thread Ajmat !
Helps us keep abreast of the plans and trends. I would also love to see plans for combined ASS facility for Renault-Nissan or being able to service Nissan at Renault facility and vice versa. This would please the customers since they get more options and also will be possible for the Renault-Nissan to reach out to customers from more locations. I am happy to note that India is becoming an export hub for Auto industry.
By the way, priorities for European spec duster is mouthwatering, Don't know when our roads and infrastructre will improve and we can also expect the priorities in that order.

[Ricky_63]

Nice & informative. I got my first service on the Duster done today. Just a check up & wash. No oil changes. A bill of INR 1260/-

Hand brake adjusted, brake adjusted, the steering column cover was loose, came back the same way without being attended. The main issue with the Duster is the shudder of the engine when started. No solution offered. This is how it is - is what I was told.

Requested engine oil change, told it is not recommended.

Overall ok, but not great. They also added a scratch on the front bumper as a "return gift"

First time ever I sent the driver to get the service done...as I could not go.

[ajmat]

Originally Posted by vishnana

Did you hear anything about possible new line or plant itself for their A entry car ranges planned from 2015 ?

I did not, but my guess is it will be either where the Datsun Go is assembled or a new line where the CMF-A model will be built

Originally Posted by Achyuth Vaibhav

It looks like Mr Ghosn is more of a Renault man rather than Nissan. Even the production of the cars tell us the whole story. Were any other additional cars spotted? For instance we may see any new model Nissan is contemplating (Terrano). Also, how is the manufacturing quality of the factory?

He is a Renault man, most strategic functions of the alliance are run by Renault. Quality is quite good and meets the benchmarks

Originally Posted by shinuak

Good thread Ajmat !
Helps us keep abreast of the plans and trends. I would also love to see plans for combined ASS facility for Renault-Nissan or being able to service Nissan at Renault facility and vice versa. .

I asked the Renault folks about that. Separate front ends and a common back end process for dealers. They said it was never considered.

Originally Posted by MaxTorque

Good report. Liked the way you asked the question regarding Renault Pulse and Scala. I was wondering how you could spot the updated Renault Fluence in factory premises. Now I got the answer.

A small clarification. Can you verify the export volume figure of Nissan Micra? I think it's not a correct figure.

This is what the Nissan senior executive told me.