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Renault-Nissan plans to expand production capacity

by ET Posted on 13 Feb 20133,996 Views Comments

Renault-Nissan plans another 3 lakh units capacity at an investment of Rs 2,000 crore



In these times of a slowdown, when major automotive companies are reviewing expansion plans, the Renault-Nissan alliance in India is going whole hog with its expansion plans. 


With Nissan exports clocking over one lakh units per annum and Renault's Duster attracting strong demand from the market, ET has learnt that Renault-Nissan Alliance, which was planning to utilise 4 lakh units capacity by 2015, is expected to be ahead of its plans by one year and is planning to add another 3 lakh units capacity for its entry level cars (Nissan) Datsun (Codenamed K2 and i2) and Renault (A Entry), which will entail an additional investment of Rs 1,500-2,000 crore. 


The decision on expansion is likely to be taken in the second half of this year. The company is already in negotiations with the several state governments, including Tamil Nadu and Gujarat. People close to the development say Renault-Nissan alliance is planning to produce 15-17 models by 2016-17. 


"With mass volume models like Datsun from Nissan and A-Entry from Renault planned in the next couple of years, Franco-Japanese alliance would need additional capacity. The likelihood of alliance expanding in Oragadam, near Chennai, are more as it already have an established set up, but it are also exploring Gujarat, which too has a good port facility for exports," said one of three people in the know of the development.


Last year, the partners created an additional 2 lakh units per annum production line to churn out more models in the future, which took the overall annual capacity to 4 lakh units. 


Toshihiko Sano, MD, Renault Nissan Automotive India, declined to divulge specific information on investment or timelines, but told ET, "We have already set up two manufacturing lines for our existing products. We will have to set up new line for entry-level cars. The decision on the additional line will be taken later this year." 


The Renault-Nissan partnership is currently building a casting and machining shop, which will help the company move from engine assembly to engine manufacturing. This will increase the localisation content to 75 per cent.


The Renault-Nissan alliance is aiming for 90 per cent localisation, going ahead. And it has, in fact, invited vendors to set up shop in Chennai to reduce the logistic cost. 


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