Renault-Nissan partnership is building a casting and machining shop, which will help them to move from engine assembly to engine manufacturing.
MUMBAI: In these times of a slowdown, when major automotive companies are reviewing expansion plans, the Renault-Nissan alliance in India is going whole hog with its expansion plans.
With Nissan exports clocking over one lakh units per annum and Renault's Duster attracting strong demand from the market, ET has learnt that Renault-Nissan Alliance, which was planning to utilise 4 lakh units capacity by 2015, is expected to be ahead of its plans by one year and is planning to add another 3 lakh units capacity for its entrylevel cars (Nissan) Datsun (Codenamed K2 and i2) and Renault (A Entry), which will entail an additional investment of Rs 1,500-2,000 crore.
The decision on expansion is likely to be taken in the second half of this year. The company is already in negotiations with the several state governments, including Tamil Nadu and Gujarat. People close to the development say Renault-Nissan alliance is planning to produce 15-17 models by 2016-17.
"With mass volume models like Datsun from Nissan and A-Entry from Renault planned in the next couple of years, Franco-Japanese alliance would need additional capacity. The likelihood of alliance expanding in Oragadam, near Chennai, are more as it already have an established set up, but it are also exploring Gujarat, which too has a good port facility for exports," said one of three people in the know of the development.
Last year, the partners created an additional 2 lakh units per annum production line to churn out more models in the future, which took the overall annual capacity to 4 lakh units.
Toshihiko Sano, MD, Renault Nissan Automotive India, declined to divulge specific information on investment or timelines, but told ET, "We have already set up two manufacturing lines for our existing products. We will have to set up new line for entry-level cars. The decision on the additional line will be taken later this year."
The Renault-Nissan partnership is currently building a casting and machining shop, which will help the company move from engine assembly to engine manufacturing. This will increase the localisation content to 75 per cent.
The Renault-Nissan alliance is aiming for 90 per cent localisation, going ahead. And it has, in fact, invited vendors to set up shop in Chennai to reduce the logistic cost.
"Already 40 of our key vendors have set up shop at Chennai, which has helped us reduce cost by 5-15 per cent depending on the components," added Sano. The JV structure, which was originally envisaged to be 50:50, had to be changed, as Renault had decided to go slow on its India investment, due to the global recession.
ET learns that the final share of Renault's investment is 30 per cent and Nissan has invested a major share of 70 per cent. The decision, which was taken in 2010, saw Nissan having a larger focus on manufacturing in India, Renault will focus its investments in the plant in Morocco.
