Are You Kwidding Me?

The Holy Grail for every marketer is to have a category killer and Renault India may possibly have one rolling out of its assembly line at Chennai right now. The entry-level car segment is where most of the action in India is and that is what Maruti Suzuki and later Hyundai got right. The entry-level accounts for two-thirds of the volume and Renault is going all-in to break into this segment with Kwid, its latest offering. Its earlier attempt with the mid-sized Logan had failed to set the streets on fire.

Like the Kwid, the Logan was super fuel-efficient in its category, had the best legroom and a boot bigger than the water closet in a Mumbai studio apartment. But it failed the Indian test of form over function. It had a boxy look and it did not help that Meru Cabs bulk-bought it, saddling it with a ‘taxi’ tag. Renault seems to have learnt not only from that but from the success of its later launched sports utility vehicle Duster as well. Incidentally, the Logan, Duster and the Kwid owe their curves to veteran Renault designer Gerard Detourbet.  

Sure, you can’t trust the French to get everything right but here they just might have. The Kwid is not only the cheapest in its segment but is also muscular looking than its peers like the Alto or the Eon. Now, price by itself is no guarantor of success as the Nano found out. The high localisation notwithstanding, it is unclear if Renault will breakeven at the current unit price-point. Plus, with its highly depreciated plants, there is nothing that stops Maruti Suzuki from dragging it to a price war. If it starts to feel the heat, higher discounts on the Alto are a given.    

Given that the Datsun Go from alliance partner Nissan did not quite get going, the expectation that Renault has from Kwid is very high. The one chink in Renault’s armour that industry watchers keep pointing out is its distribution network. Renault which has just over 200 outlets in India plans to ramp it up to 300 next year. Compared to that, small-car leader Maruti Suzuki has a sales and service network in practically every nook and corner of the country. However, Renault’s sparse network will only be a hurdle if the initial buyers encounter serious service and maintenance issues.

If Renault’s local engineering is able to plough through the rough and tumble of Indian roads, Alto and Eon better watch out. While one is not sure what Kwid actually means (earlier called Kayou, meaning commute in Japanese) Renault would want its baby Duster to do what Scorpio did for Mahindra & Mahindra; re-establish it as a born again ‘Indian’ car company. Renault clearly is playing for volume and would ideally want the acquired entry-level buyers to graduate to its higher-end cars as they outgrow the Kwid. But that curve is far ahead.