2011, thus far, has proven to be yet another growth year for the Indian automotive industry – in which various manufacturers have lined up to enter the market. The rapid fire growth being witnessed in the Indian market is in stark contrast to the stagnant or slow-growing developed markets, like the US and Europe.
The onslaught was started by the launch of uber high-end sports car makers like Koenigsegg and Gumpert, making a high-voltage splash in the market, followed up by Aston Martin, and then the Italian mascots, Ferrari and Maserati. For an auto enthusiast, this is good news because it means that some of the most desirable cars in the world are now readily available in our market, and seeing them on our roads should be a regular sight in future.
For the average consumer, however, what’s of more interest is the launch of a mass market brand like Renault in India – or should I say the re-launch of the company. After an experiment gone awry with their Mahindra partnership, the company has made ambitious and dedicated plans to enter the market solo – and with a bouquet of products, rather than sticking to just one model. So, this is their second acid test on the long winding road of establishing a new automotive brand in India.
As a frontline announcement, Renault India stated that, in the coming 5 years, they have plans of extensive investment in the country across both the manufacturing and dealership fronts – in what is an earnest attempt by the company to establish its brand name with the Indian consumer. Importantly,
one of the vital parts of this strategy, which they seem to be getting right, is the presence for the brand on-ground via the newly appointed dealer network. While their current network is already 14 dealers, it’s forecasted to grow to 40 by the end of this year, and by end-2012 they expect to have 100 dealerships across the country. For an average consumer in today’s market, customer confidence is built to a large extent by the size and presence of a manufacturers dealer network (or at least a network that’s seen to be growing substantially). Some companies have ignored this in the past and lamented it ever since.
Alongside the aggressive dealer network program, Renault has also recently announced a bevy of customer initiatives and incentives – designed to attract consumers from the already established brands. For example, when they announced their detailed strategy for the Indian market in Delhi, they flew out the first owners of the Fluence from some major cities like Mumbai, Pune, Lucknow, etc. For these customers, it’s a tremendous feel good factor, and provides for a photo-op with the company’s management in the presence of the media. This is a tremendous confidence building platform for the first customers of the company. And you can bet that they’ll flaunt their latest acquisition and this experience with friends and family. And, of course, the VIP treatment only makes them feel more special, which helps spread the story. After all, the buying experience is a major sales driver in a competitive market like ours.
What Renault is also focusing on (and thankfully so given how some European brands are suffering on this front) is building customer confidence with a bevy of measures like a comprehensive (4 year / 80,000 kilometers) warranty, technicians at each dealership trained at Renault facilities in France, and 24/7 roadside support. But more important than any of this is the customer experience when it comes to servicing the car, and the underlying cost of spare parts. Sure, some of these initiatives aren’t unique to Renault, but the benefit of this entire exercise is that the average consumer gets an import message – which is, not only is the company confident of its products, but also that it’s spending money to win the customer’s trust, giving him or her the reassurance that they aren’t going to quit the market and leave customers in a lurch. Of course, spending `5,000 crores in India in setting up a manufacturing plant does a pretty good job of announcing its intention of staying the course in the market.
The key difference in Renault’s strategy with its sister company Nissan, which seems to have a very conservative strategy and several partners to coordinate with, is that Renault already has a clear cut plan in place. This includes the launch of four more products before the end of 2012 – of which, there’ll be two SUV’s, one being the Duster aimed at the Xylo-Safari segment, while the Koleos will be aimed at a higher segment. Apart from these, Renault is planning to launch a small hatchback in 2012, which one would expect to be their volume seller, as well as a another sedan – probably aimed at a segment lower than the Fluence, and competing in the hotly contested City / Verna / Vento segment.
So, they have a good mix of products planned for the volumes that they’re aiming to achieve. But, there is one flaw that’s evident in their strategy with the Fluence at least, and that’s the lack of variants for this model. In a time where the Indian consumer demands choices, it is a tad unwise to offer a car with only one trim level for each engine. Multiple variants enable the product to cover niches within a segment, and widen the customer base it appeals to. As an aside, one rule that Renault would do well never to forget is that pricing is perhaps the most crucial factor in a cars appeal for the Indian consumer.
Overall, it looks like Renault has a fair understanding of the market and has a solid approach planned, barring a few small anomalies. The challenge now is to price the products right and keep the marketing machinery cranked up to establish the brand permanently. Also, one can’t help but keep in mind the fact the man at the helm of Renault globally is Carlos Ghosn, arguably one of the sharpest corporate leaders in the world, and the man who’s been credited with completely revamping Renault-Nissan and making it the fourth largest automotive company in the world.
It’ll be interesting to watch how Renault fares in our market in its quest to establish itself as a major player in the face of intense competition. So, let the duels begin – it’s the customer who wins after all!