French carmaker Renault has started work on a multi-utility vehicle that is likely to be launched in India in the first quarter of 2015 as the company looks to cash in on the growing segment in the domestic automotive market.
The company is looking to sell about 35,000 units a year of the MPV Lodgy, codenamed J92, which will take on Toyota's Innova and Mahindra & Mahindra's Xylo, two people familiar with the matter told ET.
Renault, which launched five products in 15 months and tasted success with its sports utility vehicle Duster, has also set its sights on its entry-level car to boost its volumes in the country. The company has mandated vendors to work towards 140,000 units a year for the small car, A Entry, which is also expected by 2014-end or early 2015, one of the persons said.
Declining to share specific details on models or targets, Renault India managing director Marc Nassif said, "We will take the direction of where the market is going, right now the market is moving to SUV and you look at our performance. MPV will see a huge trend and Renault will have to find a solution to go wisely and also find out what is best in our DNA to go into small cars." Industry experts expect the Lodgy to be priced between Rs 7 lakh and Rs 11 lakh since it will share the platform and a number of parts with the Duster.
"UVs (utility vehicles) are the toast of the town. It is the only segment in the overall Indian passenger vehicle space which is growing. With as many as 8-10 major utility vehicles hitting the market over the next few years, Lodgy is an ideal fit for India," said a leading consultant, who did not wish to be named. Lodgy will, however, face stiff competition from the new launches from Honda, Fiat and Ford stables at about the same time.
Nassif pointed to the upcoming competition, saying, "Many launches (in the UV segment) are going to happen this year, so we cannot fall asleep. On our part, we are gathering speed on Duster... we would like to maintain the momentum. More products are coming, new evolutions on products are happening, you will see that later in the year."
Renault is targeting an overall market share of 5% from the 2.5-3% in the medium term, even as the Duster has helped it garner a share of 6% of the utility vehicles segment within six months of its launch. Renault India's sales in 2012 jumped 25-fold to a little over 35,000 units, with almost 75% coming from Duster. "We are aspiring to more than double our numbers in 2013. While we harness the potential of Duster this year, we would also like to improve our market share in other segments we are operating in," said Sumit Sawhney, Renault India'a executive director-marketing.
Deepesh Rathore, managing director at research firm IHS Automotive, said Renault India's success was driven by just the Duster and that it needed to shed its premium image to do well across segments.
"Considering that A Entry small car as well Lodgy MPV will be catering to more value conscious buyers, Renault should come down the perch of premium tag and convince the prospective buyers that they can deliver a better car than the market leader at a comparable price. The other critical aspect will be to make sure there is adequate dealership penetration and the spares are readily available at affordable price," Rathore said.
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