Marriages are made in heaven, so what’s wrong with three of them? Ask Renault, whose problems in India are linked to having too many JVs, says B&E’s pawan chabra
Sometimes, the difference between an ordinary life and a life of purpose can be a well won bet, especially when we look at the life of Renault founder and automotive genius Louis Renault. This dates back to the time when he had successfully converted a De Dion-Bouon cycle into a four-wheeled small car. He named it Renault Type A. He subsequently won a bet with his friends, who challenged that the car couldn’t drive up the slope of Lépic Street in Montmartre. Not only did he win the bet, he also won the courage and inspiration to become an auto manufacturer. The rest, as the cliché goes, is called Carlos Ghosn, the singular reason why as of date, Renault operates in around 118 countries and has been able to bring in the numbers by leveraging its broad product line and its JV with Nissan. However, Carlos Ghosn, CEO, Renault and Nissan Motor Co. may want to rue the fact that Renault’s bet on India doesn’t exactly have a legendary feel so far. This is one uphill journey, where the peak remains to be scaled. And the prognosis is that the three marriages (i.e. Joint Ventures) that the company has solemnised in the Indian market haven’t exactly been of the ‘made in heaven’ kind.
At the recently held Tokyo Motor Show, CEO Carlos Ghosn managed to set the cat among the pigeons (unintentionally, if you look at his statements later on) when he announced, “I am not saying we will, I am saying we can (exit up to 2 JVs). I don’t want anybody to be surprised. We have today three partners (in India). Our intention is to continue with the (three) partners, but if it is not possible, I can tell you that we need at least one.”
The red flag has been Renault’s JV agreement with the tractor major Mahindra & Mahindra. When the Logan was launched in 2007 (positioned as an entry-level sedan with a price tag starting at around Rs.4,50,000), it was expected to sell around 2,500 units a month but has managed to sell just under 500. The car has faced a host of issues, including competition from the Swift DZire & Tata Indigo as well as the higher excise duty structure and the import duty due to low levels of localisation, a factor where its competitors have been well endowed. Maruti Suzuki, which sells every second car being sold in the country, sells around 6,000 units of Swift DZire and Tata Motors banks around 2,500-3,000 units of its Indigo from the domestic market. In addition, “Logan wasn’t able to appeal to the Indian consumer basically because of its plain looks,” says auto expert Murad Ali Baig. The company is planning a new version of the same model; but not many would want to make a bet on such a ploy succeeding as of now. More trouble for the JV has recently come from Hyundai Motors India. The company has filed a case against Mahindra Renault India stating that the latter is planning a car named Sandero; and is hence trying to cash in on its popular Santro, as the names sound similar.
Sometimes, the difference between an ordinary life and a life of purpose can be a well won bet, especially when we look at the life of Renault founder and automotive genius Louis Renault. This dates back to the time when he had successfully converted a De Dion-Bouon cycle into a four-wheeled small car. He named it Renault Type A. He subsequently won a bet with his friends, who challenged that the car couldn’t drive up the slope of Lépic Street in Montmartre. Not only did he win the bet, he also won the courage and inspiration to become an auto manufacturer. The rest, as the cliché goes, is called Carlos Ghosn, the singular reason why as of date, Renault operates in around 118 countries and has been able to bring in the numbers by leveraging its broad product line and its JV with Nissan. However, Carlos Ghosn, CEO, Renault and Nissan Motor Co. may want to rue the fact that Renault’s bet on India doesn’t exactly have a legendary feel so far. This is one uphill journey, where the peak remains to be scaled. And the prognosis is that the three marriages (i.e. Joint Ventures) that the company has solemnised in the Indian market haven’t exactly been of the ‘made in heaven’ kind.
At the recently held Tokyo Motor Show, CEO Carlos Ghosn managed to set the cat among the pigeons (unintentionally, if you look at his statements later on) when he announced, “I am not saying we will, I am saying we can (exit up to 2 JVs). I don’t want anybody to be surprised. We have today three partners (in India). Our intention is to continue with the (three) partners, but if it is not possible, I can tell you that we need at least one.”
The red flag has been Renault’s JV agreement with the tractor major Mahindra & Mahindra. When the Logan was launched in 2007 (positioned as an entry-level sedan with a price tag starting at around Rs.4,50,000), it was expected to sell around 2,500 units a month but has managed to sell just under 500. The car has faced a host of issues, including competition from the Swift DZire & Tata Indigo as well as the higher excise duty structure and the import duty due to low levels of localisation, a factor where its competitors have been well endowed. Maruti Suzuki, which sells every second car being sold in the country, sells around 6,000 units of Swift DZire and Tata Motors banks around 2,500-3,000 units of its Indigo from the domestic market. In addition, “Logan wasn’t able to appeal to the Indian consumer basically because of its plain looks,” says auto expert Murad Ali Baig. The company is planning a new version of the same model; but not many would want to make a bet on such a ploy succeeding as of now. More trouble for the JV has recently come from Hyundai Motors India. The company has filed a case against Mahindra Renault India stating that the latter is planning a car named Sandero; and is hence trying to cash in on its popular Santro, as the names sound similar.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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IIPM – FLP (Flexi Learning Program) .
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
IIPM’s Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM B-School Facebook Page
IIPM Global Exposure
IIPM Best B School India
IIPM B-School Detail
IIPM Links
IIPM : The B-School with a Human Face
IIPM – FLP (Flexi Learning Program) .
