Renault strategy in India

Résumé du document

Because of the economic context, the car market is quite compromised in western countries, especially in Europe. The French carmaker Renault was registered in 2008 and had to face to a 24% drop of its sales. That is why Renault, Nissan (44% owned by Renault) and Bajaj Motors (major Indian automobile manufacturer) have made a joint-venture recently, to launch a 2500 $ car, the ULC car (Ultra Low cost), in order to compete with the 2500 $ low-cost car Nano from the Indian company Tata. Why did these companies choose India? Why did they make a joint-venture? Why are they launching a low-cost model?

Extraits

[...] Moreover, the European image of Renault could be attractive for Asian consumers, because of the brand image power carried of quality, performance and success in Europe Why proposing a low-cost car? Renault, Nissan and Bajaj Motors decided to compete directly Tata, their main competitor in India, because of the 2500$'s Nano's car, the cheapest one in the world. Whether they had to focus on Asian and eastern market, they should have thought it was possible to compete the Nano on its own market. [...]

[...] Why launching a low-cost model? 2. ULC's target : India India is the second world population with its 1.15 billion people after China and it is considered as an emergent country with cheap labour forces and high consumption potential. Then, according to the economic crisis in western countries, carmakers might focus more on Asian and eastern markets, which are growing up increasingly and represent some important and interesting potential customers; thanks to their growing fulfilling and their huge population. Besides, with the economic & technological development of its country, India (and China too) has developed more and more rich” and middleclass population, which could be also an attractive target for western brands, compared to the economic step/budget/lifestyle of European or American people for the past 2 years. [...]

[...] Renault strategy in India 1. Renault, Nissan and Bajaj Motors joint-venture Because of the economic context, the car market is quite compromised in western countries, especially in Europe. The French carmaker Renault has registered in 2008 and had to face to a 24% drop of its sales. That's why Renault, Nissan owned by Renault) and Bajaj Motors (major Indian automobile manufacturer) companies have made a joint-venture recently together to launch a 2500$ car, the ULC car (Ultra Low cost), in order to compete the 2500$ Nano low-cost car from the Indian company Tata. [...]

[...] To face the competitiveness and the dropping sales, Renault's strategy is to enter too in this model, hand in hand with a local partner in order to succeed and to know and be proficient & efficient in the local market. We can highlight that it may works in Asian countries such as India or China, but this kind of low-cost cars are not vouch for quality & performance, it's only basic models, with not really high-tech components added. Then, it can be convenient for Indian people, who may not really care about these elements, as the high sales of Nano's car showed us; however, it can't be exported in Western countries, at least nowadays, because of the current states of mind, focused on safety & quality. [...]

[...] Therefore, according to the car market crisis, Renault & Nissan really have to adapt their strategy and focus on markets outside of Western Europe, highly touched by the crisis. They have to downsize the company and its strategy, policy, technology, to outsource their main targets & markets, to adapt themselves to new challenges. Moreover, in taking advantage of the huge potential customers, they have to implant and outsource their manufactures to profit from the cheap labour forces in order to provide low cost cars. [...]