Renault Kwid: Will Carlos Ghosn Succeed This Time??

Renault-Nissan CEO Carlos Ghosn has slightly reworked his ‘volume segment’ strategy and wants to register success this time, with the new Renault Kwid, right after a terrible stumble with the Datsun Go. Clearly, he has pulled a lovely pink bunny out of his hat – the Kwid is innovative, good looking, and perhaps affordable for an approximate price range around INR 3 to 4 lakh. He appears to have learnt essential lessons from the Datsun Go’s experience.

Yet the elephant in the room we miss out is Renault’s poor network and high maintanance/ service costs in India. Renault Kwid's approach is different from that of Datsun Go, and how far is Ghosn going to succeed is interesting to think about. 

Nicknamed as "Le Cost Killer" and "Mr. Fix It", Carlos Ghosn is the principle architect of the strong Renault-Nissan Alliance of today, and is an effective strategist for making mass-market and affordable products. May it be Nissan Leaf (as "the world's first affordable zero-emission car") or Datsun Go, his long-term plans on cost-effective production and marketing are always applauded.

As for as India’s growing market is concerned, Ghosn’s earlier attempts to crack the cost-sensitive small car market have had very little success. The Logan project with Mahindra wasn’t quite successful and even failed to create a humble image for the brand. Renault’s tie up with Bajaj Auto to build an ultra-cheap car to counter Tata Nano was also abandoned mid-way. He then pressed much hope on the Datsun brand to tap emerging middle-class buyers in India and similar markets, but the past two years (almost) experience can’t be any bliss to him.

2016 Renault Kwid sales will begin around Diwali in India with prices between Rs.3 and 4 lakh

And now, he is back again with a usual, yet slightly reworked strategy for mass markets. The tinkered strategy gives impetus on two important aspects like never before – product image and localisation. Renault–Nissan Alliance wants its future mass-market cars to be more concerned about their design and equipment levels. For Kwid, as much as 98 per cent of component suppliers are from India and the car will be made at its Chennai factory, exploiting the advantage of shared assemblies. The cost advantage out of localisation proved effective with its product strategy so far, and the strategic partnership wants to strengthen that, with India as manufacturing hub for small cars.

How different is Renault Kwid’s approach from that of Datsun Go?

Firstly, unlike Datsun Go, Renault has cleverly opted to go for a crossover rather than a pure hatchback, making it more appealing and valuable, especially considering the mind-set of emerging markets like India. This also reserves them an option of introducing a smaller, strip-down, and probably more affordable product later. Datsun Go suffered partly because of its bare-basic ‘entry-level hatch’ image, owing to its simple design and rudimentary equipment level.  

Ghosn's Datsun Go plan failed to meet its targets.

There is an integrated 7-inch navigation/ infotainment system with Bluetooth connectivity on the list, trying to appeal the car as a ‘not-so-basic’ car like Datsun Go. Renault will also offer driver-side Airbag as an option (remember the whole crash safety controversy that surrounded Go hatch). But no ABS, because, remember, cost is still an important factor.

Secondly, Renault has opted to for a smaller, newly developed 0.8-liter 3-cylinder engine instead of the usual 1.2-liter I3 engine that is used in all other small cars including Go and Micra. This clues at the alliance’s idea of developing smaller cars in future, independent of Micra-based platforms. We can, therefore, expect new models from the new CMF-A (Common Module Family-“Affordability”) platform that underpins the Kwid.

Thirdly, the alliance this time wants to make country specific products, unlike an opportunist approach seen with the Datsun. Exports aren’t going to be a big part this time since it will make the car economically unviable.

Renault’s high service costs

Ghosn sees Marutis and Hyundais as Kwid’s targets and their provisional pricing verifies that. A clear drawback I can see here is Renault’s reach across India and their comparatively high service costs. Renault says it will expand its presence to 300 outlets from 182 as of now, but it is fairly insufficient to take the might of Maruti Suzuki and Hyundai.

The real problem would be the high maintenance costs of Renault-Nissan cars in India. With most of its products are above Rs. 5 lakh mark cars, the brands have so far created a ‘value-for-price’ image for themselves. Even the small hatches like Micra Active and Pulse are expensive to maintain than many of its rivals. Their spares are costly and are hardly made available in the open-market, the biggest advantage for Maruti, Tata, and Hyundai.

However, Renault Kwid will held redefine the A-segment and may also bring more contemporary products from other brands. In that sense, Renault and the Kwid are significant. It is curious to know how Indian buyers are going to perceive the Kwid, and how far will it fare well in the competitive A-segment. Only in the long-run can we assess Ghosn’s success in his Kwid venture, though it is sure that he will not be betrayed like the Datsun Go. Also curious to know what Global-NCAP has in reserve for his new dream car!