Renault does not have deep pockets to buy market share: Sumit Sawhney

Renault created waves in the entry-level car market with the Kwid three years ago. While it has clocked a cumulative volume of about 250,000 units, it has stopped growing year-on-year, pulling down the company’s market share. Sumit Sawhney, country CEO and MD at Renault India, tells Ajay Modi that the segment where Kwid operates is facing pressure and volumes could pick up with the launch slated for 2019. Edited excerpts:

What has changed for Renault in India since the Kwid launch? 

After Kwid, the company has been able to grow on the plans of establishing network footprint across the country with 320 outlets. We have been able to create a sizeable presence and people now know the brand. But we are in a building block stage. We have got our fundamentals right with the service network.

Renault’s sales to dealers have not grown for months. Why? 

Kwid retail is down due to a decline in the segment size. We are more focused on retail than wholesales, as we do not want dealers to stock too much. This has been a focus since the start of the year. Dealers have viability challenges if you keep dumping volumes. The automotive business is cyclical and a lot depends on launches planned by the company. The company grows on the basis of launches and life cycle management. People are discounting steeply in the market and I cannot afford to do that. We do not have deep pockets to buy market share. 

Are Renault dealers unhappy about declining volumes?

You cannot expect a product to do similar volumes for three years in a row. You have to work on product life cycles. India is passing through a special phase with changes in safety and emission norms. If I do something today, I may have to change again after nine months. Our life cycle management gets pushed due to government policies. Volumes in certain places have come down but dealers understand this and know that the next product will change that. A dealer is a long-term guy and our business is not like riding a horse, it is like riding a chariot.

But there was an expectation that Renault will build upon the initial success of Kwid. What has changed that?

Actually, nothing. For past two-three years, I have maintained that we should sell 100,000 cars a year because that is my benchmark. We were doing 50,000 for a few years before this. With new products, you move to the next level, maybe 150,000 units. In the medium-term, we want a 5 per cent share here and have that on a consistent basis. Today, we are at 3.1 per cent.

You spoke of a 5 per cent share by 2019?

I have not yet said that I cannot go to 5 per cent by 2019. Sometime your plans can be pushed forward or back. This year, some of our plans got pushed back. We are selling in the mini segment and that segment is down by almost 6 per cent. It was growing sometime back. You have a double impact — you need a lifecycle enhancement and you are in a segment that is declining. This segment was 24.2 per cent two years ago, now it is about 20 per cent.

Is the headquarters still bullish on India?

Yes. India is among the top 11 markets for Renault. They know the market headwinds here. In spite of that we are the eighth-largest player and biggest European brand here. India is a key market and India will maintain that status. The market will continue to grow. The market leader is gaining share. However, it is quite challenging for the other brands.