Renault plans further assembling in India

French auto major Renault which has just independently forayed into the Indian market with its premium mid-size sedan Fluence, imported as completely knocked down (CKD) unit from Turkey, is looking ahead to do more of the assembling locally by early next year to attract lower duty given the government relaxes the CKD norms.

“If the government changes the taxation rule, we will breakdown the engine and gear box and assemble more of it in India by January 2012,” said Len Curran, Vice President (sales and marketing), Renault India. However, he added that there will be necessary infrastructure in the company's facility at Chennai by the time. Renault, along with its global alliance Nissan, will make an investment Rs 4,500 crore by 2015 at the Chennai facility.

In the 2011-12 Budget the government has raised customs duty at 30% as against 10% earlier for pre-assembled engines, transmissions and gearboxes.

However, Curran added even after doing more after assembling, the car will remain a CKD. “This will still remain CKD, but we will try to bring it under the threshold of higher taxation. Now Fluence is attracting 30 per cent duty. If we are able to meet the condition by doing more of the assembling locally, then this will attract 10 per cent duty,” he said.

Industry body Society of Indian Automobile Manufacturers (SIAM) has already asked the government to either reduce the duty or give manufacturers more time to adjust for more localisation.

Renault India which earlier had a joint venture with Indian automobile manufacturer Mahindra & Mahindra (M&M) for their product –Logan, has independently entered into the Indian market with Fluence. The key parts for the car are imported from the company's plant in Turkey.

The company will be introducing a premium sports utility vehicle (SUV) Koleos by October this year, which will also be a CKD. However, there will be launch of three more cars in 2012 and all of them will be localised.

“In 2012 we will introduce three more cars, including a hatchback. There will be no CKD issues with them as all of them will be 60 nper cent localised,” Curran said.

The company with five models under its belt by the next year, is planning to sell 100,000 units in the next three years. It is aiming for a market share of 2.5 per cent in the passenger car segment in India by 2013, and a 5 per cent market share in the long run.