This Article is From Dec 16, 2012

Renault taps Logan creator for entry-level car in India to take on Maruti, Hyundai

Renault taps Logan creator for entry-level car in India to take on Maruti, Hyundai

Renault's move into low-cost cars, which has kept the French automaker afloat as mass-market peers drown in European losses, may soon help it sink competitors beyond the old continent.

That is the long game for Gerard Detourbet, the man behind the no-frills Logan and other "Entry" models, who has a new mission: to devise an even cheaper vehicle programme for India that can compete with such champions of frugality as Maruti Suzuki and Hyundai.

If he pulls off the challenge set by Renault-Nissan boss Carlos Ghosn, it could then give his car-making alliance a new weapon with which to undercut rivals in emerging markets around the globe.

Mr Detourbet, 66, moved to Chennai early this year and has been quietly building an Indian supplier network and crack team of local executives, including several lured away from the competition.

"We don't set out to poach people, but it happens that they sometimes come to us from Suzuki and Hyundai," Detourbet said in a recent interview during a return visit to Paris.

"We've put together a new team, so of course there are people from all over."

Set firmly in Chief Executive Ghosn's sights is a major auto market combining the promise of breakneck growth with implausibly low prices.

Suzuki Motor Corp holds sway in India with models from its Maruti subsidiary starting below Rs 250,000 and accounting for 1 million registrations a year in a market of 2.6 million.

Hyundai has also made dramatic inroads of late with its Eon mini, priced closer to Rs 300,000.

Renault's new "sub-entry" architecture will offer roomier cars for a similar price tag and spawn at least one additional model for Nissan, Mr Detourbet said.

Renault and its 43.4 per cent-owned Japanese affiliate, which share Mr Ghosn as CEO, already make costlier vehicles such as the Pulse and Micra subcompacts at their Chennai factory, claiming a combined 3 per cent Indian market share for April-November.


Producing a car in the Eon's $5,500 (around Rs 3 lakh) bracket would then provide the blueprint for an assault on the lower ends of markets such as Brazil and Russia, outflanking offerings from Volkswagen, General Motors and others.

"India is the only country where you begin to see modern cars at this kind of price," Mr Detourbet said.

"Once you've done battle with the world's best cheap car manufacturer, you can go into another country where there isn't a Maruti Suzuki and be relatively comfortable."

While most French auto executives come from applied science backgrounds or hothouse business schools, Mr Detourbet left behind a promising career as a university mathematician. Admirers including Arnaud Deboeuf, his successor on the Entry programme, say his approach is refreshing.

"With Gerard, it's an innovation a minute," Mr Deboeuf said. "He's not your typical auto engineer."

After joining Renault in 1971 as an IT specialist, Mr Detourbet rose steadily through the ranks to become senior vice president in charge of gearboxes and transmissions in 1997. Louis Schweitzer, then CEO, asked him to set up the group's low-cost car programme three years later.

Logan-derived models such as the Duster SUV and Lodgy minivan have since become an earnings mainstay, helping Renault to avoid the kind of job cuts and plant closures announced by PSA Peugeot Citroen and Ford.

Thanks largely to the 12,000-euro (Rs 8.6 lakh) Duster, Renault recorded a modest auto division profit in January-June, with almost half its global deliveries outside Europe. Peugeot, which still depends on the region for 61 per cent of sales, lost 662 million euros.


But the success of low-end Renault models - built in Romania and Morocco and sold under the Dacia brand in Europe - has also proved controversial as France struggles to defend industrial jobs and the carmaker presses unions to give ground on pay and conditions.

"The money invested in Dacia could have been spent on developing the new mainstream Renault models that are seriously lacking today," said Patrick Biau, an official at the Force Ouvriere union.

Renault-Nissan's scramble to field cut-price Indian vehicles follows several false starts in the country.

While the original Logan caught on unexpectedly in Europe, Indian consumers were not seduced. Renault scrapped a production venture with Mahindra & Mahindra in 2008, then discussed plans with Bajaj to build an ultra-cheap car to counter Tata Motors' $3,000 (Rs 1.63 lakh) Nano.

That project was abandoned last year, as the Nano itself fell far short of Tata's sales objectives.

Finally, Mr Detourbet was tapped once again for what, given his age, might be his last major overseas assignment for Renault. The new programme could launch its first car in late 2014, he said.

"We're about where we were two years before the Logan launch, in a race against time to prove feasibility," he added, insisting that "nothing's been decided yet".

But Mr Detourbet smiled when asked if he could still report back to Mr Ghosn that the idea won't fly.

"I get the impression that would be difficult," he said.

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Copyright @ Thomson Reuters 2012