It takes three to tango...

Renault, Nissan and Mahindra. The trio have been in the news for a while now & deserve to be in the limelight more than Shilpa Shetty for her escapades in a television show. For 8,00,000 is not a small number, not a bit when we are talking cars and not money.

'SHIFT_the future'. And Nissan has been shifting quite a few gears at that. Old news now, janata-carrier Mahindra froze a deal with Renault for rolling out 50,000 cars per annum from it's Nasik plant, which is expected in a few months time. But meanwhile, fickle-minded Nissan has been juggling it's options, first tying up with trusted partner Suzuki with which they already have experience making cars abroad, thinking of it's own 2,00,000/annum plant and finally going the straight-forward route by joining Mahindra-Renault. But there is a twist in the tale, Nissan will still manufacture 50,000 cars with Suzuki for export. And I said straight-forward, because Renault has a 44.4% stake in Nissan, the latter being a 15% stake-holder in Renault.

Nearly 11 lakh cars were sold in India during 2005-06. So when the tripartite alliance announced 8 lakh cars, even though it will take a few years for realisation, it definitely had everybodys antennas up and pinging for information. One thing we can be sure off - with a plant planned for 8 lakh cars, the trio would have a 'volumes' advantage while procuring parts which could be sourced through a common supplier base. More so, it would open up a plethora of opportunities such as export of parts, standardisation, using common dealer networks, supply chains etc. which would lead to further cost savings. Eventually, it would mean straight benefits to the bottomline.

Say Nissan and the first word that strikes the auto buff's head is 'Skyline'. But sorry, I think Nissan's thinking small cars. Loads of them, though they have not released a clear outline of their plans yet, but exports is a big possibility. They have made a slow start with the X-Trail selling about 200 cars last year, which has given them precious time to evaluate the market from close quarters. One rumour floating around though, is that they may for the first time design a car ground-up with Renault, a small car specially for the Indian market. Of course, the Indian market is that important. And entering at a phase when market-growth is high, it's the best chance Nissan might ever get to crack the market.



Coming to the Logan, dimensionally longer than most of it's competitors, a long wheelbase and a boot big enough to swallow a baby shark makes for great self-advertising. It has proved itself too, having sold 4,00,000 units since it was launched till the end of 2006, hence establishing a strong foothold in it's various markets. And it's frugal, so that should encourage a few more to uprgrade from their small cars. Romanian sourced engines would come in three formats, 1.4 and 1.6 petrols, and a 1.5 diesel and the car would be launched in a total of 11 variants. As of now, Mahindra-Renault(let's get used to it!) has announced a launch price of Rs.4.5-5 lakhs for the Logan(I wonder if that's becuase of our tax structure or the nature of our market that allows the company to have a monopoly over the price), so don't get surprised when Renault makes pompous comments about the Logan being 'the best value for money car in the world'. At this price, it will go head on against the Indigo and the Esteem. Competition would also come from the more expensive bunch in the mid-size segment and from the premium small-car segment. But the Indigo has probably the most to loose, frankly, it wasn't born with quality in it's genes and it does not have great competition in the same price range in the mid-size segment. With the Renault, quality comes free. But I really feel that the Logan is the more unique product in this segment, not beause it is extremely different, it is not, but because it provides a good balance of the various qualities needed in a car. The rest fall short somewhere, the Indigo on quality, the Esteem's staleness, a Small cars smallness and a mid-size cars price. Now the only thing left is, Mahindra should manufacture the product well and the duo should have a winner in their hands.

Overall, Nissan's small car plans will further enforce India's position as a global small car hub. Renault would be pretty confident about its prospects and are definitely going to stir up the market with the Logan. They would be hoping that a capacity of 50,000 cars will not be enough. Mahindra has all to gain from the venture, for it can learn the art of car manufacturing which they are yet to master. It will also open more windows for them, in the form of technology and new markets for their utility vehicles. So this three-way alliance is pragmatic, profitable, the surest way to give the customer diversity and the fastest route to evolution. The only issue now would be integration of different cultures which are bound to be starkly different. But once surpassed, it would translate into a melting pot of resources and products of common benefit to the manufacturers and customer alike. With 8,00,000 cars, the stakes are high and the margin for error is low in a competitive market like ours. So whatever they are planning better work for the trio, for as Mahindra would say, 'Nothing Else Will Do'.