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-   -   Renault-Nissan India begins massive downsizing (https://www.team-bhp.com/forum/indian-car-scene/167305-renault-nissan-india-begins-massive-downsizing.html)

This is very surprising news when they are planning to launch Kwid very soon. Its a small car and expected to get good response in terms of volumes.

"Renault-Nissan Automotive India has begun a massive downsizing at its car factory off Oragadam that could bring down the axe on as many as 3000 jobs, according to a company source. The move is in response to piling inventory of cars at the factory and dealer networks over the last three months as sales took a hit. The company has decided to cut production from 40 cars an hour at the plant down to 20, a 50% output cut in the country's largest car plant.

The factory has in its inventory 5,140 vehicles of the alliance's popular SUV in the country, Renault Duster. It latest Multi-Purpose Vehicle Lodgy numbering 4,100 are stashed up at the factory. Besides these numbers, the national dealer network holds 10,500 cars.Renault and Nissan were drawing nearly 12,000 cars from the factory a month, but have now cut the sourcing to 4,000.

The factory, set up in 2010 in the presence of the alliance's chairman and CEO Carlos Ghosn, makes popular brands such as Micra, Duster and Terrano. It was built at an investment of Rs 4,500 crore and a capacity of 4 lakh cars at full ramp up.

Renault India Private Ltd and Nissan Motor India give the manufacturing contracts to Renault Nissan Automotive India Private Ltd. Besides these entities, there is also in Chennai the Renault Nissan Technology and Business Centre India."

Read more on below link:

http://economictimes.indiatimes.com/...w/48551746.cms

One reason is that global production of the Micra from India is ending soon. My guess is that the line will be used for the Kwid but volumes will not be high as this is for local demand and not global!

Add to all they've pumped in money (god alone knows how much) to rope in Ranbir Kapoor to be their brand ambassador.
Renault India's Passion For Life commercial is a very ordinary effort and placing Ranbir Kapoor or anybody for that matter there doesn't make any difference.

By the way, commercial's jingle is scored by Rehman. Add few more crores to that. Looks like this company is running headless.

https://www.youtube.com/watch?v=SmKqNv_Hl5A

Instead of cutting down jobs at the factory by half, and thereby losing market further, Renault could have cut down prices of the vehicles. That would result in clearing the inventory fast.
Top end Duster / Terrano OTR = 10 lakhs, is a very good price for thrashing the competition and grabbing the market again.
If Lodgy is available at about 8 lakhs OTR, what would be the position for Ertiga, Mobilio, and to some extent even Innova?
If the situation was so bad at their factories, they would have known it before anybody, and they need not have planned for a small car in an already crowded hatchback market, at this time.
Kwid will not be able to turn around their prospects for good, because, it can at best match Datsun Go's sales IMO.

The initial success of the Ruster got into their head and made them assume that they could keep pushing cheap Romanian vehicles at premium prices in this market.

The blatantly obvious and unapologetic cost-cutting on top of this only added insult to injury. When you expect your customers to pay a premium price for your economy badge and then ration out the specs and equipment like the local moneylender, you are exhibiting complete disdain for the customer and his money.

I hope we're seeing the end of Renault's one-antique-engine-on-multiple-vehicles strategy. They have a bunch of good vehicles in their lineup, but think that they are too good for us.

If they had brought in one line of really good vehicles backed by a good dealer and support network instead of spending big $ creating 3 brands and multiple variants, they may have done better. Or perhaps failed less spectacularly.

I'm sure they have their MBAs, the research-driven analysts, lots of excel sheets and a never-ending supply of powerpoints.

BUT

Sometimes, it's all about the basics. Really. Renault-Nissan would do well by reading this thread - link.

It's all down to the product, the customer and how you take care of him. 90% of Nissan owners I've spoken with hate the way they've been treated after buying the car. I'm part of that 90%. They have an incredibly poor street reputation, at least in Mumbai.

Admit it : Indian auto market is one of the toughest one to conquer! You have to disguise yourself as Maruti Suzuki, Hyundai, Tata or M&M to sell your products in bulk here. No bulk = No profit! (Exception : Luxury cars)

You cant just plug your cheapest home country model and play the Indian market. You had started off really well with Duster, but you forgot to update it from time to time. Eventually, you paid the price when Ford launched Ecosport. Forward to June/July 2015, Many Indians rejected you in the anticipation of Hyundai Creta.

So you have inventory of 9,240 Dusters and Lodgys. Plus 10,000 vehicles at dealerships. What to do next?

One of the options : Moving these 19,000 units quickly.

- Halt the production of Duster and Lodgy (You probably did this already).
- Design a true Indian / Asian car shell. I know the French like space and do not care much about the shape. But we Indians do!
- Cut product prices (A Real cut, not just exchange, loyalty bonus stuff).
- Provide incentives to dealers to clear off the existing stock.
- Provide long term credit option to dealers so that they can place more orders.
- Focus on converting the prospective Innova / Ecosport / Creta customer into a Lodgy / Duster / Terrano customer.
- Launch dirt-cheap maintenance plans to attract customers.
- Service Nissan and Renault vehicles under one roof for cost savings.

And please have mercy while laying off 3000 people. They have families to feed! Instead take the other measures. Ask the top honchos to work for nominal fees for some time.

Indian business legends like JRD Tata, Walchand Hirachand, Kirloskar etc would have never considered "laying off" as profit maximizing mechanism. They cared for people and their families.

Time for you to set an example!

Labor and factory come under the Cost of goods sold (along with raw material and OEM sourced items).
Reducing it immediately boosts the gross margin %.
A figure that would've been used often during the high level meetings between Nissan India and Nissan global management

Reducing the sell price will decrease the GM% figure, something that is not taken kindly by the global managers breathing down on Indian necks.

This ad released by Renault in India after winning F1 states that the Pulse has the same heart as their F1 car.

Now how can that be?

I always thought the Pulse's engine was more powerful than that of their F1 car.

Well, for starters, they can revive their fortunes by focusing on some of these lines of strategy

1. Drop the terrano. It makes no sense to have an overpriced economy car and the same car resold as extra premium.

2. Focus rapidly on speeding up the launch of the new Duster, and drop the price. There is no way, they can sustain demand with this kind of expensive pricing. Bring it down and ull see Sales moving again.

3. Spend money on customer service and opening up larger number of dealer network and service centres.

4. For God's sake, please introduce the automatic variants. Duster and Lodgy both are likely to move if they offer automatic variants, at least they have new differenciators. I just don't get it that they have to strategise so much to get such automatics.

5. Don't think people are foolish.how many rebadged cars are u going to sell. Renault should focus on certain segments, Nissan on the others and Datsun with the budget brand. Still don't see why Nissan which is an economy brand by nature can't merge into Datsun brand in india and stop showcasing sunny and Micra as premium stuff, and sell it under the Datsun brand anyway. Like the evalia, they can drop off the terrano and leave two segments to Renault through lodgy and duster. Couple that to updated models with automatic and a much better pricing should really kickstart some life into Renault Nissan again

I once entered the Karnavati Renault Dealership asking for Fluence. I personally love the car even over the new Octavia. The new French lines are just beautiful.

But all the dealership had in stock was Duster cars in every trim and colour.

Lodgy was not launched.
Pulse and Scala were not on display (but in stock)
Fluence and Koleos available only on order.

How do they expect to sell anything else? Nobody even knows Renault has others cars on offer. And the duster is simply outdated compared to the onslaught of competition.

Maruti, hyundai, Honda, Tata and Mahindra have a minimum of 7-8 models on sale at all dealerships.(Even the Tata aria is in stock).

Renault should learn a bit from how Ford is turning things around in India.

Actually I think you're unfairly bashing the MBAs and the analytical process. Any reasonable person (forget MBAs or otherwise) would've come to similar conclusions. Its more of leadership faults and minion-like mindset of everyone below, regardless of degree.

Sometimes one memo by one misguided leader is all it takes to destroy thousands of jobs and billions in shareholder value and nearly kill off an iconic company:
https://en.wikipedia.org/wiki/Stephen_Elop

3000 is too small, should ask TCS how many they did ! Those days are gone, everyone is same now.

Some manufactures are Proactive (Hyundai); some are Reactive (Maruti) and some like Renault-Nissan are not active itself.

When Renault-Nissan's misadventures in India are documented, there'll be TWO pages just for Datsun.

The biggest culprits are the Sales Planning team, who sets the targets, convey market demand to production, anticipate sales, log indents for production, provide inputs on pricing and marketing budget, among few other things.
THIS team is the actual culprit along with their heads.
Sad to see others being made the scapegoat, quite a common practice in manufacturing.