Move appears inevitable to boost localisation content, for cost control.
Renault and Nissan , two giants of the car industry are greasing their hands in their bid to increase the engine and transmission facility in India. With an investment of Rs4500 crore, the companies are earmarking the production stint of 400000 units a year from the Chennai plant. The initial share agreement was among the three giants- Renault, Nissan and the Indian Mahindra&Mahindra, but the last one withdrew on some grounds, making the shuffle of shares among the remaining two.
The new proposal will be in addition to the manufacture of cars and sedans and to be operated at full swing in the next three years. Presently Renault has the practice of importing engines for the Logan sedan (from Romania and Spain) adding burden on import duty resulting with costly affair. According to Nissan’s MD&CEO, the imminent purpose is to increase the capacity from 2lakh to 4 lakh before finalizing any product design.
The industry policy is that an engine plant with a capacity of 4 lakh units will require an investment of Rs1500 crore. The advantage for the two companies is the low cost in production in India and the heavy returns by way of exports from here. The earlier entrant to such a move, by way of an MoU with the Government of Tamilnadu was Ford Motors in its bid to push its car Figo, for setting a plant for engine with the capacity of 250000 units. Nissan, while tightlipped about the price of the proposed car, is justifying its localization of 80% to be on par with Suzuki A-Star and Hyundai i10. The similar steps would be evolved by Renault too in the case of vehicles crafted in this unit. Though the engine frames will bear equal specifications, the power, efficiency and functioning of them will be on the lines of individual vehicle type.