With the help of the newly launched multi-purpose vehicle (MPV) Lodgy and the small car that is expected to be launched this month, Renault India aims to acquire 5% market share by 2016. Sumit Sawhney, MD and CEO of Renault India, in an interview with Malyaban Ghosh and Pranav Nambiar, says India needs favourable tax pacts with other countries to become an export hub.

Volumes for your largest-selling car, the Duster, have declined in FY15. How do plan to arrest the fall?

We launched the Duster in the second half of 2012 and have been ramping up production. So, in the first quarter of 2013,  we were clearing pending orders. If you see the Duster’s monthly sales figures, the subsequent months show consistent performance. In fact, at the retail level, we have marginally grown. I would say the Duster’s performance in the last 20 months has been very stable. The number will remain at the same level; the only concern is, the market is not moving much and the growth we expected is absent. Under such circumstances, companies have to make sure they hold on to their current positions.

How do you see compact SUVs doing in FY16?

The segment will see some growth, but the expectations have been high; it will be tough to live up to them. The overall industry sentiment has not improved. This segment draws 10 lakh units on average. At the macro level, we are not seeing any growth in the economy. People are not willing to spend more.

Over the last couple of years, you have developed your portfolio substantially.

We will continue to grow our product portfolio. Our aspirations don’t stop at achieving 5% market share. I think India has got the potential despite the challenges, and will become the third-biggest automobile market after China and US by 2020. We expect some regulatory changes in the months to come besides improvement in infrastructure. We still find people driving thirty-year-old cars in Bombay.

Most of your competitors are expected to launch their compact SUVs this year. How do you plan to tackle that?

We have constantly been working on new products and variants of existing ones. The Duster has been able to create a strong position for itself in the segment. At the same time, the segment will also grow given the infrastructure development happening in the country. Companies that launch products will have a lot of catching up to do to be at the same level as the Duster. But that does not mean we have become complacent. We have plans, but cannot share them with the media. We just launched the new-generation Duster with a lot of changes. We also plan to expand our dealer network to 250 from the present 157. We are also expanding in the tier 1 and tier 2 cities.

What are the reasons for your falling volumes, both domestically and internationally?

From the volume point of view, Duster was the key driver and, with the launch of the Lodgy, we have seen good potential. At the same point, exports suffered because the Duster was made for India — it has right-hand drive, for which there are few takers in the international market. We were exporting to markets like the UK, but European trade agreements with India are not very favourable. If India has to become an export hub, then, besides making in India, it is imperative to have favourable tax agreements with other countries.

What is the future of automatic cars in India?

Automatic cars have failed to attract volumes here, though premium cars are all automatic. It will cascade, but it will take some time as automatic cars are costly and fuel efficiency drops substantially, by 15-20%.
In India, the initial response to automated manual transmission (AMT) was good. Being a predominantly small car market, India will accommodate AMT but it is too early to comment.

Small cars have not been doing well in the past few months. Why launch one at this point?

It still remains the biggest segment in India. One needs innovation and a strong strategy to enter the segment. For us, the choice was between sitting on the fence or taking on others. People are always looking for a good product.

As you prepare to enter small cars in India, is there a perception battle to be won — people might associate you with SUVs?

Duster is very strong product that has helped the Renault brand a lot. But if you want to grow, you have to cater to a larger customer pool. We will have to do a lot of work around the product, distribution and communication strategy. At the same time, we have to make sure that that we keep on investing in the mother brand, i.e., Renault. Globally, we have changed the brand’s essence.

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