The ever-resourceful Renault-Nissan and their ever-creative chief executive, Carlos Ghosn, have just launched their latest offering for the emerging markets, the Renault Kwid.
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Priced at Rs 300,000 ($4,700) is it certainly pitched price-wise at the emerging markets and at first glance should prove popular in its first market, India, but also in other emerging markets in time such as Indonesia, Vietnam and others.
Emerging Auto Markets
The attractions are clear, all have massive populations, low per-capita car ownership markets with huge medium-to-long term potential. A Financial Times article explains that Renault had to start from the ground up in designing the Kwid to achieve such a low price.
They based the whole design team in Chennai, the city known as the Detroit of India – a first for a western car maker – using mostly Indian designers and sourcing Indian parts. The concept they say is frugal, innovation and required a completely new clean sheet approach.
Illustrating the problem, the FT quotes Navi Radjou, a management theorist in saying “companies don’t like to learn new things, to be blunt. They try to exploit their existing knowledge, not to rethink what they do from scratch.”
Why Automakers Miss
Western businesses see developing economies mostly as new markets where they can sell more of what they already produce. Those that try to come up with something new tend only to tweak existing offerings, which rarely works. GM and Volkswagen may well be cases in point, having poured millions into the market with limited success.
Even Indian firms get it wrong. Tata Motors‘ Nano was certainly cheap when it was introduced in 2009, but it flopped. Spurned, the article says, by rudimentary features and a poor safety record.