Ghosn Gives Cheap Car Strategy Another Go After Datsun’s Stumble

Renault SA is hoping to succeed where its partner Nissan Motor Co. failed: by introducing a cheap new hatchback in India to challenge the dominance of Maruti Suzuki’s Alto, the nation’s best-selling car.

The Kwid compact, unveiled Wednesday, will be priced from 300,000 rupees ($4,700), Carlos Ghosn, Renault’s chairman and chief executive officer, said in Chennai. Ghosn said the car, which will go on sale in September, will be a big contributor to Renault’s growth in India.

Nissan, also headed by Ghosn, had similar aspirations when it began selling the first model under its Datsun brand, the Go, in India last year. Since then, Nissan has sold about 16,000 of the hatchbacks in the country, according to figures from the Society of Indian Automobile Manufacturers -- fewer than the number of Altos sold in a single month. Renault aims to boost its local market share to 5 percent by the end of 2016 from 1.7 percent in the 12 months ended March, aided by the Kwid, which will be its cheapest model.

“The segment is very price sensitive,” said Amit Kaushik, principal analyst at IHS Automotive in New Delhi. “It will be very difficult in the absence of Renault having a strong network or rural reach, which is where this segment sees the bulk of its sales.”

Renault has 157 dealers in India and will add 48 more by December, Sumit Sawhney, Renault India’s managing director, said last month. In comparison, market leader Maruti has 1,500 outlets and gets about 30 percent of its sales from rural India.

Renault’s new car will be built on Renault and Nissan’s Common Modular Family A platform. It will be pitched against Maruti’s Alto, which starts at 246,163 rupees in New Delhi.

Tata’s Nano

On Tuesday, Tata Motors Ltd. announced an automatic version of its egg-shaped Nano model. The Nano, touted as the world’s cheapest car, has struggled to find buyers. The automatic version starts at 269,000 rupees in New Delhi and targets urban buyers instead of its original target demographic -- scooter riders looking to buy their first car.

Known in the 1970s for its sporty, fuel-efficient models in markets such as the U.S., Datsun was revived to widen Nissan’s reach to customers in emerging markets, where car ownership levels are lower than in developed economies.