Renault-Nissan $600 million fresh investment: Will it change Brand's Fortune in India?

In the words of Guillaume Cartier, Nissan's Africa, Middle East, India, Europe, and Oceania region Chairperson, "India was the first alliance plant and India will be at the centre of this new chapter of the alliance."

Well, India definitely is one of the markets where Nissan and Renault both wanted to capitalize, but they were not able to do so. There has been a turnaround to an extend for the partners in India due to some aggressive strategies that they have put up.

Renault-Nissan New Plans for India

On Feb 13, 2023, Renault-Nissan, the Franco-Japanese automotive partnership, announced a $600 million (Rs 5,300 crore) investment in India. The capital will be infused to deliver six new vehicles, including two small electric cars, and to upgrade their Chennai facility, according to the PTI. The new cars will also comprise four SUVs powered by traditional engines, the first of which will be available in 2025.

Nissan and Renault will each produce three of the six cars. The alliance anticipates that the increased investments would generate 2,000 new employment in India through expanded R&D operations.

The most interesting part though is that Nissan & Renault both intend to manufacture electric vehicles in India.

In the presence of Tamil Nadu Chief Minister M K Stalin and Renault India Country CEO Venkatram Mamillapallee, Nissan Global Chief Operating Officer and Member, Alliance Board Ashwani Gupta exchanged a memorandum of understanding with the state government promoted nodal agency Guidance Bureau MD and CEO Vishnu Venugopal at an event.

Nissan-Renault Global Partnership Structure Changes

The investment in India was preceded by the announcement of the alliance's global structure earlier this month, which put both Renault and Nissan on an equal footing and ended Renault's previous dominance.

Ashwani Gupta said, "We are writing the next chapter for the alliance in India following the global alliance news we made in London about moving to the next level."

He further added, "What this means for India is that we will design, make, market, and export six brand new cars, four of which will be SUVs and two of which will be A class EVs. To do this, we will invest $600 million, or Rs 5,300 crore, and create 2,000 new jobs."

In addition, by 2045, the alliance plans to have its Chennai manufacturing site run entirely on renewable energy.

Similarly, François Provost, Renault Group Chief Purchasing Officer and Managing Director of Alliance Purchasing Organization (APO), stated, "India is an important market for the Renault Group. India also plays an important part in our global R&D footprint. This joint effort with Nissan is the first tangible result of the new Alliance objective, which was announced on February 6."

Gupta said the timing for investment and the introduction of new items "We've already begun (the investment) since we've begun working on the products. I believe the first product will be (released) in 2025, and that this investment will be totally completed a few years later."

He added the SUVs will be positioned in the fast developing mid-sized 'C segment', while the two electric cars will be in the compact 'A segment' category.

This investment is just for the six new models and some of the modernization work that will be done at the Chennai facility to allow it to use up to 80% of its capacity for both domestic and export sales, he added.

Renault Nissan Automotive India Pvt Ltd (RNAIPL) operates the alliance facility in Chennai, which has an installed yearly production capacity of 4.8 lakh units.

Renault-Nissan and its future in India

According to Gupta, current capacity utilization is 49%, and "with these items, we will be attaining up to 80% of production capacity utilization, for both local and export demands."

"However, when we speak about battery electric (vehicles), this factory will require some investment in modernization with the new technology that we will be continuing to undertake, and that may not be totally included in the $600 million dollars of investment," he said.

The alliance has no intentions to enhance capacity in the foreseeable future, and the goal is to utilize all installed capacity, including local and export volumes.

All of this being said by the bigwigs of Renault & Nissan. If currently the production capacity utilization is just 49%, they definitely need to take it up to at least 70%. The Indian market is highly competitive and there is no doubt that without them increasing their production capacity and introduction of new, interesting, and feature-packed models, they can achieve the desired goal.

Also, the fact that they are looking to manufacture EVs as well in India will be the deciding factor of whether they can grab the attention in the Indian market. Electric Vehicle market in India is completely ruled by the Tata Group and there are already some players disrupting the EV scene. But with Renault & Nissan entering the market, the trends can change.

The problem though is, they only have a singular profitable car, Nissan Magnite. But can all these changes in the alliance and the fresh investment mean that they are ready to change the Indian Auto Market scenario.