We will have more workshops than sales centre: Renault India

Cashing in on the success of small car Kwid, Renault India, the youngest brands in India is betting big on after-sales service. The Kwid was launched in September 2015 and has been the game changer for the company. Deccan Herald’s Umesh M Avvannavar sat down with Renault India Operations Country CEO and Managing Director Sumit Sawhney on the sidelines of the new Duster product presentation in Pune recently. Excerpts of the interview:

How has the journey been for Renault in India, and the launch of small car Kwid?

Renault in India is the youngest brand, and we really started our volume journey with Duster that was launched in July of 2012. So its over three years now, and we are running in the 4th year. With the Duster, we were able to establish a very strong benchmark in this country, in the SUV space. 

Then last year in September, we announced Renault Kwid which was another game changer. And today, we are seeing the success of the car in India, especially in a category which is one of the most, I would say, competitive category where everybody has seen challenge. So, our promise and our commitment were to create game changer products in this country. But in 4 years, we have also learnt a lot. So if you see, Renault Kwid is just not a car, but a thought process and a philosophy. This is the car which from day one was launched with over 98% localisation, which really tells that we have established a strong base in India.

When we launched the Renault Kwid, we knew the mix, and we were ready because of our research. Today, when we talk about our mix, our mix is very much skewed towards the top-end, when we see customers coming forward and buying cars with navigation systems. Everybody wants a car with a navigation system, so we had aligned our production much before that. If I talk about this car, we were getting feedback from our customers first of all that we need something which has to be automated.Last year, we sold over 54,000 units (all brands). This year, we expect to double the figure. We will cross one lakh units by the end of the year (2016). 

Overwhelming response for Kwid and also the new Duster is expected to push sales. By the end of March, we will touch 10,000 units of Kwid.

Please share some thoughts on network expansion
At a time when we close this year, we will have more workshops than showrooms. Our customers have given a thumbs up in terms of aftersales experience. Currently, Renault has 180 workshops (as of January 2016), and by the end of the year, we will have over 240.

In 2015, we expanded our dealer network from 157 outlets to 205 outlets. So you can imagine, close to 50 outlets were added and all of them were in the smaller cities and each one of our new partners is holding good amount of bookings. 

On the success of Duster and your plans about competition in the marketWorldwide, we are selling Duster in more than 100 countries, and we manufacture Duster at five different plants in the world. 
So this is the mainstream product for us, of which we have sold near 1.5 lakh units in the current shape and this would remain our strong volume player going forward also.We have very clear and strong plans for India. Today, if I see last year we were the number 8 manufacturer, and this year, from the beginning we are now number 7. By the time we closed the year, we had an objective and this is when we had met last time, when we were planning Duster AWD, and I said Renault India had a clear objective of achieving 5% market share in 2017. 

That was our goal which we announced two years back, but we are going to cross 5% market share this year in 2016, and for sure we will be number 6 manufacturer this year in terms of volume, because we have strong portfolio plans.

As we move ahead, I can only assure you that from our side, you will find products which are relevant for Indian customers, not products which are nice to have, but products which really customer wants. I think this is one of the initiatives from our side which is really understanding our customers and all of you know that we have a strong customer community.

Why doesn’t the Duster all wheel drive version sport an AMT?We have done a lot of customer research, and it came out very clearly to us that customers who are looking forward to an All Wheel Drive (AWD) vehicle are highly skewed towards manual transmission. So if we would have put that in AWD, I don’t think it would have justified the volumes and AWD customers I would say the skew was so strong it was over 80%.

Maruti Brezza was recently launched and Ford Eco sport has slashed Rs 1.12 lakh. Will there be any impact on your sales?
I would only say one thing that sometimes, it is a comparison of apples to oranges, but this time I would say this is not even a comparison of an apple and oranges. So yes we don’t play in the category of sub 4-meter. Somebody really wants an SUV-looking car they can look forward to other options available in the market. But if somebody is really interested in an SUV, then I would say the answer is Duster. Though, we saw some strong entries in the market in the last two years, I think over a period of time, volumes with Duster have been very constant. Yes, customers were looking forward to some more features like AMT, more refreshments coming from our side, but I don’t think we see any competition or comparison with a sub 4-meter SUVs, so I don’t expect any drops and whatever trends we have seen after announcing the price, I don’t see any challenges.

What about Easy R? Is this something Renault has developed, is there again a vendor point required?
There is a supplier and we don’t make AMT’s internally but we work very closely in development of the technology. All those of you who have driven the AMT car would have felt the difference, like the first time 6-speed Easy-R automated transmission. So, a lot of work has been done jointly to make sure that we have been able to give convenience of automated driving to our customers without compromising on drive, feel or power.The automated manual transmission, or Easy-R is essentially a system fitted with computer-controlled electromechanical actuators. These basically do the gear changing for you, and so it sits over the regular 6-speed manual gearbox and controls its operation. If you talk about automated transmission at Rs 11.66 (ex-Delhi), you compare with any regular automatic car in this category and a customer doesn’t compromise at all on pricing or on fuel efficiency. We have all kinds of technology available with us, but more important is to bring the relevant technology in any country.

How about the localisation of production of Duster?
Right now, we are in our 70’s with Duster, and clearly, want to cross 80% localisation even on cars in this platform. Over 80% localisation is something we are working on, and I think by the end of this year, or by early next year, we will be able to achieve that level. In a market like India, localisation is extremely important from a cost of ownership point of view for customers also. I think Renault KWID is seeing the success and one of the reasons for that is the credibility which Duster has brought. The low cost of ownership of Duster whether it was fuel efficiency or maintenance cost are the major factors that gave a lot of confidence to our customers, especially in smaller towns who come forward and buy Renault Kwid.

Where is the 20% gap?
First of all, let me clarify this because you know every automobile OEM has got a different definition of localisation. Let me be candid here — what I am talking to you is what we call PNR in exact cost what you put in the car so it is percentage, it is not number of components, and I don’t say 80% of the components are localised or I don’t count powertrain and then I do localisation, No it is a complete car. So, there are certain components especially the electronics, you know if you talk about, it’s a matter of economies of scale. I told you that Duster is produced in 5 different plants in the world, we procure parts especially those which are not frequently changed and we get economies of scale, we import them. Having said this, most of the parts which are used for maintenance, we have already localised that.

What is production capacity you are looking for?
Today, we have a production capacity of 4.8 lakh units per annum at the Oragadam plant in Chennai. The Oragadam plant presently is capable of producing 1,000 cars per day working on a two-shift cycle. This figure will increase to 1,600 cars a day after the initiation of the third shift from April. So that is what is the total installed capacity what we have today.

What is the contribution of Renault towards ‘Make in India’ and for the export market?
I think Renault KWID with over 98% localisation is the first time any manufacturer in India has ever launched a car. That is our commitment to ‘Make in India’ and I think today KWID is not only for India in automotive industry, but even for the Government of India, it is a big success story. We felt ourselves very proud and privileged that the Hon’ble Prime Minister of India (Narendra Modi) came forward and acknowledged Renault’s efforts for ‘Make in India’, so with Kwid we started our domestic operations selling cars within India. Next moth onwards, we are exporting cars in countries around India. As I have already announced, we are also starting our export to Latin America, in Brazil that would be fast exports because the cars have a big plant there, so the cars would be manufactured there. Then we are exploring other markets like Africa, Renault is very strong in Africa both South and North Africa, and after seeing the success of this car, a lot other markets are coming to us and they are exploring whether this car is relevant for their market and they are giving us their feedback so that’s the plan right now. It’s just 4-months-old in terms of our delivery, so we are still working with other countries and with Duster also, we are doing small exports but largely into right hand drive markets.

Please highlight about the technology, design, and research and development.
Customer is very conscious and concerned about the fuel economy and wants a car which is within his/her range. So our engineers both here in India, as you know we have got a technology centre in Chennai  which has got over 5,000 people working and our engineers in France started working together to find out what technology could be used.  And, finally we zeroed in on using the AMT technology. But, we said we have to bring Automated Technology which can meet the demands of the customers without compromising on the performance of the car. Duster is well-known for its style, drive and handling and we should work to bring in something which is much more than what is being offered in the market.
 So,  this AMT which few of you would have driven and few of you  would be driving tomorrow morning is the first time we are launching 6 speed Easy R Automated Manual Transmission in India and it has got lot of differentiations.We have two design centers in India, they have played a very important role in making this new Duster and we have strong road map going forward. But one thing which I would say where we are working very closely is to understand Indian consumers’ needs.

 So when we were designing the Kwid and when we were working on the specifications of Kwid or variants of Kwid, we did a lot of research and lot of you know who joined us at journalist drive at that point of time were asking me the question that what kind of customers you expect coming for Kwid. But today, if you see for a four year old brand in entry segment, you know what you require is a big amount of trust of  customers.  So today if I see the customers of Kwid, 1/3rd of the customer is a new car buyer which means they are graduating from two-wheeler to a car, 1/3rd of them are those who are changing their existing cars and buying Kwid as a second car and 1/3rd of them is taking this car as a second or third car in the family for family members. So, so we have a good mix.

 When I see from a demographic point of view, then in terms of registration itself, close to 14% of registrations of Kwid comprises of female buyers, but that does not mean that only 14% female are driving Kwid but the registration number, as you know is just half of the story.Thanks to the digital revolution which we got now. We know the exact information about our customers and the bookings what we got over one lakh, we haven’t got it from metro cities. Now that’s the key difference when we launched the Duster,  the response of booking was very high from metro cities like Mumbai, Pune, Delhi,  Bengaluru.  But with Renault KWID, even the smallest of the towns we have got strong bookings.