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Dusting off the Competition- Case study



June 2014
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No other car in recent times has created the sensation the Renault Duster has done in the Indian automotive industry. This case study looks at what contributed to the car’s success.

When French automotive giant Renault first entered India through a joint venture with Mahindra & Mahindra, it placed high hopes on its maiden product offering Logan – a mid-sized sedan launched in 2007. But the car with its dated looks and high pricing failed to strike a chord with Indian consumers. Such was the scale of the failure that it ended up killing the joint venture in 2010. Renault’s brand name took a massive hit in India. Ironically, the Logan’s failure laid the foundation for the success of Renault’s compact sport-utility vehicle (SUV) Duster.

After its break-up with Mahindra & Mahindra, Renault chose to go alone. It set up a Rs 4,500 crore factory at Oragadam near Chennai along with its global partner Nissan Motor Company. The facility caters to the needs of Nissan and Renault. But the Logan debacle continued to haunt the company. The first few products it rolled out from the new plant were positioned as “image drivers”. It launched premium sedan Fluence in May 2011 and premium SUV Koleos that September. Both were assembled at the Oragadam plant from imported kits. Its next offering was the Pulse, a compact car launched in January 2012. The Pulse was a cross-badged version of Nissan’s Micra, and was also positioned as a premium offering. Renault’s focus on resurrecting its image in India and consequent premium offerings meant poor volumes in a country that prefers value for money.

Renault desperately needed a “volume driver” to shore up its operations. It identified a gap in the SUV segment. “There were SUVs costing Rs 20 lakh and above manufactured by global players and those priced from Rs 6 lakh to Rs 10 lakh produced by Indian companies. We saw an opportunity there,” says Armelle Guerin, Director, Product Planning at Renault India. The company launched the Duster priced between Rs 8 lakh and Rs 12 lakh in July 2012.

The Duster took the Indian market by storm. It fuelled the segment of compact SUVs and grabbed a 23 per cent market share within a year. The Duster’s success was such that Renault had to triple production within months of its launch from seven per hour to 20 per hour. Today, one in three cars produced at the Oragadam plant is a Duster. That is not all. The Duster today accounts for 86 per cent of Renault India’s production, 81 per cent of its sales and 100 per cent of its exports.

How did a predominantly European car win the hearts and minds of difficult Indian customers?

The answer lies in what Renault India did in the 24 months following its decision to bring the Duster to India. The Duster was Renault’s first ‘real’ offering in India after the Logan. “The Logan’s failure reminded us of the importance of understanding the customer, getting the product right and positioning the Duster correctly at the time of the launch,” says Marc Nassif, Managing Director, Renault India.
The European Duster did not have these attributes. Renault made several changes in the car to suit Indian conditions. These included reinforcing the suspension to tackle rough Indian roads and offering a higher ground clearance. It added more brackets to the car’s doors as they tended to be used roughly. The engine was tuned to meet the quality of the fuel in India and deliver high efficiency of at least 20 km per litre. The tuning of the engine was done in Paris; the company shipped diesel from India to get the tuning right.

In early 2011 the company conducted a customer clinic in New Delhi to validate its learning. It put the prototype of the European Duster, after the necessary changes, alongside rival cars in a price range of Rs 7 lakh to Rs 12 lakh, and asked a few potential customers and car experts for their views. All of them had to also sign a confidentiality agreement with Renault. “What we got was a ‘wow’,” recalls Guerin. “The feedback we got showed us that we were on the right track.”

The company then set to make actual changes in the car. “We identified a 3F strategy – Fast (the adaptation to Indian needs must happen within 12 months), Frugal (on limited budget) and Fantastic (with no compromise on quality),” says Karim Mikkiche, Managing Director, Renault Nissan Technology & Business Centre India, whose team executed the changes to the car. Three teams – the product development team, Renault’s design studio in Mumbai and a team of engineers – began to work as a small company within Renault India. Nassif, the India MD, was empowered to speed up decision making.

“We realised early that to achieve the 3F objectives we needed the modifications to be done locally with a local team. That helped. We executed the changes in 12 months, within budget and ended up with a product people love,” says Nassif. “Such a success would not have been possible if the modifications were done in Paris.”



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