Renault – Nissan To Stop Badge Engineering Their Cars in India


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Renault Nissan have decided to put a halt to badge engineering of their models in India after the launch of Nissan Terrano.

Sharing an interesting piece of news from Livemint.
Japanese manufacturer Nissan Motor Co. Ltd and its alliance partner and French auto maker Renault SA will stop sharing products in India after the launch of Nissan Terrano—which will share its concept with Renault’s hugely popular Duster. This could mark the beginning of an end to badge engineering in India, a strategy companies or partner car makers use to sell one car under two brand names. The Indian subsidiaries of Nissan and Renault have been sharing cars with minor changes and different badges since 2010. Nissan’s Micra and Renault’s Pulse are essentially the same cars with different names, as are Nissan’s Sunny and Renault’s Scala. Duster’s twin Terrano is expected to be launched by Nissan in September. A spokesperson for Nissan India confirmed the company and its global partner Renault will stop sharing products in India.

There are lessons that you can learn from your mistakes, Vincent Cobee, corporate vice-president of Nissan Motor, said in reply to a query on why the two partners have decided to stop sharing their products. “It is something (the alliance) we used to launch the brand with less investment and quicker. Once we are established, we won’t need it as much as that, and it will go down by business principle,” Marc Nassif, managing director of Renault India, said in a 1 July interview. He, however, did not say whether the two companies will stop sharing their products. Companies resort to badge engineering mainly to save on costs in design and engineering as well as by sharing platforms and components. Normally, companies pay a model fee or a royalty for using a partner’s product or car under their own name.

Badge engineering as a concept was brought to India by Volkswagen AG, whose subsidiaries Volkswagen India Pvt. Ltd and Skoda India Pvt. Ltd in 2008-09 began sharing products by merely changing the logo. Volkswagen follows the strategy globally, but in India the German firm has had little success with it. Skoda India discontinued its Fabia hatchback in May as the model was eating into the sales of Volkswagen’s Polo (the cars don’t look similar but share the platform and engine); sales of Volkswagen’s Vento in India were hit after Skoda launched Rapid last year.

Badge engineering works only when car makers have their brands well-established and command strong loyalty, said Hormazd Sorabjee, editor, Autocar India. In India, the strategy has often resulted in cannibalization. “The main problem for the alliance (Renault-Nissan) is the lack of differentiation in both their products, which resulted in a brand confusion,” Sorabjee said. In 2012-13, Nissan Micra’s average monthly sales dropped to 955 units from 1,553 units in the previous year. Renault’s Pulse, which was launched in January 2012, sold 465 units a month during the last fiscal year. Micra and Pulse together sold 1,420 units a month in 2012-13, according to data provided by the Society of Indian Automobile Manufacturers (SIAM).

Globally, Renault and Nissan do not have such a cross-badging strategy, he said.
Abdul Majeed, automotive practice leader, PricewaterhouseCoopers, said customers in India make their decisions based on market perceptions. “If they do not see any value addition, they will not consider buying those products,” he said. “That’s what has happened with some of these (cross-badged) products and eventually their sales were below expectation due to a certain kind of perception about their products.”

Nissan, which entered India in 2005, has only a 1.3% market share and 72% of its total production was exported last year. Renault, too, has been struggling to make a mark in India after it spilt with Mahindra and Mahindra Ltd in 2010, having just a 3% market share till last fiscal year. Indian auto industry sold 2.68 million passenger vehicles during the last fiscal year, according to SIAM. Being global alliance partners since 1999, Nissan and Renault have built joint manufacturing facilities in Chennai with a capacity to make 400,000 cars a year, mainly to achieve economies of scale and expand product portfolio.
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Renault-Nissan to end badge engineering in India

The Renault-Nissan alliance has announced that it will stop badge engineering in the Indian market once the Duster based Nissan Terrano is launched sometime in the latter half of this year. The alliance has so far launched the Nissan Micra based Renault Pulse and the Nissan Sunny based Renault Scala.

A report from Livemint suggests that the company took the step to badge engineer vehicles in a bid to launch the brand in a quicker yet much cheaper manner. The companies have not achieved the results they wanted and are now likely to introduce their own line up of vehicles across various body styles.

We had earlier reported that both companies will continue to share their facilities by virtue of being global partners via the CMF platform sharing architecture in the interest of keeping economies of scale. This also means that the Chennai plant will now be used at optimum capacity as it will be producing models from three manufacturers; Nissan, Renault and Datsun.

Source:
http://www.carwale.com/news/10903-renaultnissan-to-end-badge-engineering-in-india.html
Renault, Nissan decide to stop sharing auto models in India - Livemint
 
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