Report: Renault Eyes Indian Tech Center as Part of Low-Cost Car Plan

PARIS – Renault SA’s project for a very inexpensive car for emerging markets could involve a new technical center in India with 1,000 engineers.

An article in the national newspaper Le Figaro, citing unnamed sources, says Renault is aiming to make a car that can be sold at a profit in emerging markets for €2,250 ($3,000).

A spokeswoman for Renault would not comment on the report, confirming only that Renault intends to make a car that would be marketed below the €5,000 ($6,700) entry-level price for its Dacia Logan model.

Le Figaro says the car would not be sold in Europe and would not meet European crash test standards. It suggests such a car would have to employ parts already amortized through use in earlier models and forego features such as power steering, antilock brakes and more than one airbag.

Italy’s Fiat Automobiles SpA and India’s Tata Motors Ltd. already are working together on such a low-cost car, and Renault plans to compete in the segment. In interviews with French media earlier in June, after Renault released photos of the new Laguna coming this fall, CEO Carlos Ghosn announced the project, saying Renault would produce a low-cost car below the Logan.

Renault-brand sales and market share have been falling for four years in Europe. In May, Renault group worldwide sales were off 7.2% from a year earlier, the fault of the Renault brand in Europe. Renault sold 103,264 passenger cars in Western Europe in May for 7.7% of the market. In 2002, Renault controlled 11.3% of the European market.

New model would be half price of Dacia Logan.

Meanwhile, sales of the Dacia Logan were up 60% in Europe, thanks to the addition of the Logan MCV alongside the sedan. For the group, sales outside Europe were up 6.8%.

Le Figaro says the Indian project, including the technical center, will be presented to company executives for approval before the end of June.

Renault and partners Nissan Motor Co. Ltd. and Mahindra and Mahindra Ltd. are investing $900 million in a factory to open near Madras, India, in 2009. Capacity will be 400,000 units.

Nissan may be involved in the same low-priced car project, as Ghosn said in May the Japanese auto maker was working on a car for emerging markets.

Meanwhile, in an interview with Le Figaro, Ghosn doesn’t rule out the possibility of an eventual partnership with a U.S. auto maker such as Ford Motor Co. or Chrysler Group, despite the failure to reach a tie-up with General Motors Corp. last year.

“There is no reason to think that synergy would not be real with other auto makers than GM, after 2009 when Renault and Nissan are back on track,” he says.

On the possibility of creating a new luxury marque or potential interest in Ford’s Jaguar Cars or Land Rover operations now on the block, Ghosn says, “We will have to ask ourselves the question of creating a new marque the day when Renault would have a complete range. The purchase of another marque would bring nothing immediately to Renault or to its Alliance with Nissan.”

Ghosn also says Renault is “constantly looking for a partner for an electric car, the perfect clean car.”

And he says efforts could be made to revive the Alpine brand, which Renault owns. “It is part of Renault’s heritage, and it will be used one day or another,” he says. “It is an asset that we will have to modernize.”