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Renault revs up for solo drive with 6-7 launches
Business Standard, 9 Feb '10

France's second-largest car maker Renault is ready to make an aggressive solo entry in India with seven or eight new models, ranging from a 1.1 litre hatchback to a luxury sedan.

The French major will officially announce its solo India plans on 9th of February.

The move comes after Renault's troubled five-year partnership with Mahindra & Mahindra (M&M) failed to provide the French company with a platform to become a serious player in the country. The joint venture, in which Renault owns 49%, has been able to sell only 7,000 cars annually of just one model, the Logan.

Renault and Japanese car maker Nissan - which share a common global CEO in Carlos Ghosn - have also tied up with Bajaj Auto to work on a low-cost car (in which Bajaj will hold 50%, and Nissan and Renault the rest). This project has been delayed by over a year with the new deadline fixed for 2012.

Renault's small car is expected to compete against the Hyundai i10, a version of its luxury car Fluence which will take on Honda Civic and the Skoda Octavia, a model of the Koleos, a sports utility vehicle, will compete with the Honda CRV, and a version of the Kangoo, a utility vehicle, that could lock horns with Maruti's low-priced Eeco.

At least two or three of these cars are expected to be launched in the next 12 months.

The new models, will be produced by Renault Nissan India at the Chennai facility, owned in equal proportions by the two companies. The two car makers, which have cross holdings in each other companies globally, will only share the manufacturing facility but make and sell their own cars.

Although the Logan is currently being sold through dealerships appointed by Mahindra Renault (MRPL), these new models from the French company will be sold through a new set of dealers chosen by Renault India.

The Chennai facility will be made operational before May this year when Nissan will also launch its newly developed compact car from the facility. The platform of this model will be used by Renault to make its own compact car as well as a mid-sized segment sedan. Both companies are also checking the feasibility of setting up an engine facility.

The Chennai facility, which has a peak capacity of 400,000 units a year, will witness a combined investment of about Rs. 45 billion (US$ 962.8 million) from both partners. So far Renault has invested about Euro 100 million (US$ 139.1 million) into the new plant.

Although plans of having a shorter Logan to take advantage of the lower excise duty on hatchback was being worked out, nothing concrete has taken place. Sources say M&M has developed a shorter version of the model which falls just below the mandatory four meter length, allowing it to qualify for the eight per cent excise duty against 20 per cent levied on bigger cars.