Renault-Nissan Bolsters BRIC Plans with Expanding India Alliance


, Chennai, India

Renault-Nissan Bolsters BRIC Plans with Expanding India Alliance

For a carmaker that only sold a few hundred cars in India in 2009, Nissan’s expansion in the world’s second most populous nation is gaining momentum at a remarkable clip.

This March will mark the latest milestone, with the Renault-Nissan Alliance plant in Chennai, southern India, set to open a second line.

The move will double capacity on the road to a joint 10% market share in India by 2016 and comes after Nissan registered best ever monthly deliveries in January, selling 5,168 vehicles.

The plant currently assembles Nissan Sunny sedans and Micra compacts alongside Renault’s Fluence, Koleos and Pulse nameplates.

“As you can see behind me, we have the No. 2 line, which will give the plant the capacity to make 400,000 vehicles a year after we increase production from March,” says Kou Kimura, chief executive officer and managing director of Renault-Nissan Automotive India Private Ltd. (RNAIPL). “Increasing output in Chennai will raise competition in the market and help up us realize world-best quality.”

The 45 billion rupee ($900 million) facility, located about 2,200 kilometers south of Delhi, already holds the honor of being the fastest plant construction—from groundbreaking to inauguration—in Nissan or Renault history.

Today, the majority of production is exported, with India-built Micras sold in around 100 countries.

That export-ratio will fall, with Nissan alone projecting local sales to reach 100,000 annually by 2013, up from just over 400 in 2009.

Ashvin Chotai, managing director of consultant Intelligence Automotive Asia, says the Alliance’s strategy marks a shortcut to scale in India, where industrywide auto sales are about a fifth of China.

“A balanced strategy serving the domestic market, and supporting production volumes in the local plant with exports makes the most sense,” says Chotai. “The bigger challenge now is to build up market share in what is a very competitive segment in India.”

Key to Chennai success has been combining the best of Renault and Nissan production sites around the world, a flexible and dedicated local workforce, and clear instructions from Alliance CEO Carlos Ghosn, says local chief Kimura.

“From the ground-breaking ceremony, the idea was to have the plant built in 21 months, which was by far the shortest time-allotment for any such plan at Nissan or Renault. The reason for this? CEO Ghosn gave us the directive to not delay the plant’s completion,” says Kimura. “We were late on some things, but had backup plans — most of which we ended up using. Flexibility was key and ultimately we were able to build the plant.”

With the latest expansion almost complete, Chennai is well on its way to become a template for future growth, putting a capital I in the Alliance’s BRIC strategy.

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