France’s second-largest car maker Renault is ready to make an aggressive solo entry with seven or eight new models, ranging from a 1.1 litre hatcback to a luxury sedan.

The French major will officially announce its solo India plans on Tuesday.

The move comes after Renault’s troubled five-year partnership with Mahindra & Mahindra (M&M) failed to provide the French company with a platform to become a serious player in the country. The joint venture, in which Renault owns 49 per cent, has been able to sell only 7,000 cars annually of just one model, the Logan.

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Renault and Japanese car maker Nissan – which share a common global CEO in Carlos Ghosn – have also tied up with Bajaj Auto to work on a low-cost car (in which Bajaj will hold 50 per cent, and Nissan and Renault the rest). This project has been delayed by over a year with the new deadline fixed for 2012.

Renault’s small car is expected to compete against the Hyundai i10, a version of its luxury car Fluence which will take on Honda Civic and the Skoda Octavia, a model of the Koleos, a sports utility vehicle, will compete with the Honda CRV, and a version of the Kangoo, a utility vehicle, that could lock horns with Maruti’s low-priced Eeco.

At least two or three of these cars are expected to be launched in the next 12 months.

The new models, will be produced by Renault Nissan India Ltd at the Chennai facility, owned in equal proportions by the two companies. The two car makers, which have cross holdings in each other companies globally, will only share the manufacturing facility but make and sell their own cars.

M&M had expressed dissatisfaction over investing in a new vehicle manufacturing plant in Chennai (along with Renault and Nissan) and had opted to move out of the tripartite joint venture in January 2008.

This renewed approach by Renault towards India marks a turnaround by the French giant from last year’s decision of putting its India plans on hold indefinitely, after it suffered a $3.8 billion loss in the first half of 2009.

Although the Logan is currently being sold through dealerships appointed by Mahindra Renault Private Limited (MRPL), these new models from the French company will be sold through a new set of dealers chosen by Renault India.

The Chennai facility will be made operational before May this year when Nissan will also launch its newly developed compact car from the facility. The platform of this model will be used by Renault to make its own compact car as well as a mid-sized segment sedan. Both companies are also checking the feasibility of setting up an engine facility.

The Chennai facility, which has a peak capacity of 400,000 units a year, will witness a combined investment of about Rs 4,500 crore from both partners. So far Renault has invested about Euro 100 million (Rs 650 crore) into the new plant.

The Logan facility based in Nashik is currently operating at just 10 to 12 per cent of its peak capacity of 50,000 units a year. Mounting losses and reduced demand for the car forced both Indo-French company to reconsider the partnership.

Although plans of having a shorter Logan to take advantage of the lower excise duty on hatchbacks was being worked out, nothing concrete has taken place. Sources say M&M has developed a shorter version of the model which falls just below the mandatory four meter length, allowing it to qualify for the eight per cent excise duty against 20 per cent levied on bigger cars.

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Honda Motor Co has said it will recall 8,532 small cars in India for free repairs of faulty power window switches that can cause fire. Subject to the recall are the Fit compact car, called the Jazz in some parts of the world, and the City small sedan.

The step is part of a worldwide recall the Japanese automaker announced last week to address the problem. Honda said last Friday it will recall about 646,000 small cars in North America, Europe, Asia and other regions in response to a total of three cases of fire that were reported in the United States and South Africa.

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BMW was the first to do it with BMW Studio. Premium carmaker SkodaAuto India, a unit of the Volkswagen Group, has been quick to follow suit by launching its limited series of boutique showrooms in India.

What is unique is that the showrooms (Skoda launched the second one in Mumbai last week), are not about selling cars, but to promote the brand. The boutique shops will have one car displayed inside, while the rest of the space will showcase a wide range of lifestyle products such as Skoda T-shirts, kit-cars, fashion and car accessories. Skoda will shortly introduce virtual product tours and express test drives as well. The company is planning to launch 15 such showrooms in nine cities by the end of this year. These will be different from the usual dealer shops which will have all the car models.

Skoda doesn’t have such showrooms anywhere else in the world, but plans to replicate it in other countries, depending on the experience here. The success of these boutique showrooms will be evaluated on the number of footfalls it can generate rather than sales of cars. However, from the commercial viewpoint, the dealers operating these showrooms will also have higher targets to meet than other dealers as the consumer exposure is also much higher.

So what is the idea behind a showroom without cars?

Thomas Kuehl, board member, sales and marketing, SkodaAuto India says it’s the Skoda experience that counts. The company is also in talks with a few fashion designers who would display and retail their creations at these showrooms.

“The boutique showroom stands out from the others in terms of its contemporary design concept. They are created keeping in mind the lifestyle of our customer. Opening such a showroom in a prime commercial area allows us to market the brand easier and quicker”, says Kuehl.

Existing dealers of the company will be making the required investment in setting up these showrooms and will be responsible for managing them as well. They will be run under a separate team and management appointed by SkodaAuto specialising in a different kind of consumer approach than what is otherwise experienced in a normal auto sales outlet. Although SkodaAuto has been in India for the past eight years, it has so far sold just 80,000 units of four models. This is largely due to its absence in the volume-generating compact car category in the affordable segment of Rs 3-4 lakh. The company intends to launch the Yeti, a sports utility vehicle (SUV), in the second half of this year. Although the company has not provided details on the pricing, the SUV will compete for space against Toyota Fortuner, Chevrolet Captiva, Honda CR-V and Ford Endeavour which are sold in the price band of Rs 16-20 lakh.

In addition SkodaAuto will also launch a refurbished Fabia, its hatchback with new engine options and a refreshed interior. These new launches along with other activities including a new compact car below the Fabia, is expected to shore up the company’s market share in the domestic market. For the period ended December 31, SkodaAuto saw sales of 11,992 units, a growth of just 6 per cent, compared to the industry growth of 24 per cent.

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A little over two years after its launch, i10 has replaced Santro as Hyundai’s flagship brand in India. That’s because the average monthly sales of i10 have reached 12,000 a month against 7,000 of Santro.

Hyundai’s Marketing Director Arvind Saxena says i10 has finally become the company’s flagship brand due to its sterling performance in calendar year 2009. i10 has exceeded Santro’s sales despite its higher price (Rs 3.35-5 lakh) compared to the latter’s Rs 3.2-3.6 lakh.

 Analysts say i10 overtaking Santro is a sign that the Indian customer is moving on to bigger cars even in the budget segment. Maruti Suzuki found itself in a similar position a few years ago when Alto overtook 800 to become its largest selling car in India.

Saxena, however, doesn’t want to underplay Santro’s role. “Santro is also a very strong player in the Hyundai portfolio and still pulls in a large number of customers. We recently refurbished Santro and that has added to its appeal.”

Apart from its superior performance (i10 was adjudged the ‘Car of the Year’ by the prestigious ICOTY jury in 2008) due to the advanced 1.2 litre Kappa engine delivering greater operational efficiency in terms of both fuel consumption and emissions, a big credit for the car’s success goes to its aggressive and clever advertising.

Last year, it organised a customer event nicknamed the ‘Kappa Challenge’ – a unique concept to touch, feel, drive and experience i10 equipped with the Kappa engine for all its existing and potential customers. Set to prove the supremacy of Kappa engine, the ‘Kappa Challenge’ was organised in Delhi, Mumbai, Chandigarh, Kolkata, Pune, Lucknow, Ahmedabad, Hyderabad, Bangalore and Chennai.

In addition, to prove the reliability and performance of the i10, another unique event was organised when two cars were driven from Delhi to Paris by members of the media. The cars were driven for over 10,000 km in 17 days and across Europe. i10 performed it flawlessly and reached Paris without a hitch.

The company also attributes a lot of i10’s success to its brand ambassador Shahrukh Khan.What is interesting is that the superstar has stopped using Khan in Santro advertisements. Saxena would only say that the superstar was the perfect fit as a brand ambassador for i10.

Buoyed by its success, Hyundai also showcased an electric version for i10 at the Delhi Auto Expo last month. The i10 Electric offers dual recharging cycles and would take around five hours to be fully charged, which will enable the car to run for 160 km. Saxena says both i10 and Santro could co-exist as the latter is positioned as a value-for-money car that is ideal for a first time buyer, targeted at nuclear families. On the other hand, i10 is positioned as a performance car that is urban, stylish, sporty and targeted at the younger audience.

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