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Renault Pursues Growth in India, Launches New Budget Car

The Kwid will go on sale in the second half of the year, priced at 300,000 rupees ($4,700).

CHENNAI, India - Renault launched a new budget car in India on Wednesday, seeking to expand its foothold in the huge but highly competitive market.

Renault CEO Carlos Ghosn described the Kwid as "a car for conquest" designed to deliver high-volume sales as the French auto giant tries to increase its share of the Indian market.

The Kwid, the first Renault (IW 1000/74) car to have its global launch in India, will go on sale in the second half of the year priced at 300,000 rupees ($4,700).

"India is not an easy market but we ... decided to play a role on this market," Ghosn said at the launch in the southern city of Chennai -- India's carmaking hub.

"This vehicle is a global car. If we make it in India, we will surely make it in all the world," he said, adding the country could be the world's fourth-biggest car market within five years.

Foreign automakers have made a beeline for India in the last two decades, seeking to tap a vast market in the country of 1.25 billion people and leverage its low workforce costs.

India's car market grew by almost 5% in the last financial year with 2.6 million cars sold.

Renault currently accounts for around 1.5% of sales in India, but Ghosn said the company wanted swiftly to increase that to 5% with the Kwid and a new family car called the Lodgy.

"It's an innovative, affordable and attractive SUV," he said of the Kwid.

The new Renault model is aimed upmarket of Tata Motors' (IW 1000/150) Nano hatchback, which was billed as a cheap car for the masses when it made its debut in 2009.

Tata revamped and relaunched the range this week at a slightly increased price of 199,000 rupees after it flopped due to poor marketing.

However Renault faces strong competition in the small car sector from the Indian-Japanese manufacturer Suzuki-Maruti, which holds 45% of the market, and from South Korea's Hyundai (IW 1000/56).

Nissan (IW 1000/31) is also eyeing a 5% share of the Indian market and is due to launch its new model next year.

Analysts said the opportunities in the compact car sector remained substantial, but Renault would need to differentiate its models from those of competitors.

"While the opportunity is quite big, it is not easy to get a foothold in the segment due to the well-entrenched dealership network and broad product portfolio of Maruti and Hyundai," analyst Anil Sharma of IHS Automotive told AFP.

"Product differentiation is the key here. It is almost impossible to compete with Maruti and Hyundai on price alone."

Renault went to great lengths to develop the Kwid in India to keep costs down.

It will go on sale in India first before being rolled out across South Asia. If it succeeds it may be launched in other emerging markets, although it is not intended for sale in Europe.

Ghosn said India was the only country outside China capable of growth rates of more than 6% a year.

"[The Kwid] was developed close to its market. Supplier sourcing in India has been raised to 98%. We can't be competitive if we don't use the resources in India," he added.

Renault sold almost 45,000 vehicles in the financial year ending March 2015, most of them the Duster SUV.

by Etienne Fontaine  

Copyright Agence France-Presse, 2015

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