With diesel variants now accounting for over a fourth of India's passenger car sales, French major Renault has decided to roll out this fuel's versions in three of its new launches next year with more locally-sourced parts to cut costs.
"Every model which we launch next year will have a diesel version," said Len Curran, Renault India vice president for sales and marketing. "Our focus is on diesel cars."
Last year, diesel cars accounted for 27 percent of the 2.52 million passenger cars sold in India and the Society for Indian Automobile Manufacturers (SIAM), the apex lobby for the auto industry, expects this share to go up to 33 percent by the end of this fiscal.
Renault has made this strategic move at a time when the auto industry is facing a rough patch, following falling passenger car sales due to high fuel cost and soaring interest rates. Petrol prices were hiked five times this year, while diesel remained stable.
Also, the weakening of the Indian rupee against the US dollar has added to the woes of carmakers, making import of components expensive and thereby pushing up input costs.
Renault has plans to launch Pulse, a hatchback in B segment, at the New Delhi Auto Expo in January 2012. In the second half of the next year, it will launch Duster, an SUV. In the fourth quarter of the year, it will roll out a sedan.
The carmaker, which entered India in 2005, says it expects India to become the world's fourth-biggest car market within three years. In March 2010, the Renault-Nissan Alliance opened its unit in Chennai that has a capacity to produce 400,000 cars a year.
Renault launched a luxury sedan, Fluence, in May, that runs on petrol and diesel. In September, it came up with a compact SUV, Koleos, which operates only on diesel. The company also has big plans for its K90 diesel engine in the Indian market.
Curran, who expects India to be the second fastest growing market after China, said his company aims to cover a minimum of 35 Indian cities through its distribution network before August 2012.
He said local sourcing was a strong strategy to cope with currency fluctuations. "The two vehicles launched in May and September have a very low level of localisation. But Pulse and Duster will have over 60 percent of localised parts."
Asked whether the company would raise prices of its models if the rupee plunges further, the Renault executive said the company will follow the strategies of other auto firms. "Our benchmark is the strategies of competitors. We will be following the market."
On Wednesday, the company said it will raise the price of Koleos from Rs.22.99 lakh to Rs.23.99 lakh from Jan 1, 2012, due to rupee depreciation and rising input costs.