Not long ago, the sub-4m sedan segment was the most lucrative space in the Indian auto market but the advent of crossovers with the same tax benefits has changed things. Save for the Maruti Dzire which is unshakable by any change in trend and the Honda Amaze, other compact sedan contenders have been witnessing steady decline in their sales volumes.
Ford Aspire, VW Ameo, Hyundai Xcent, and Tata Tigor are nowhere near the segment leaders in terms of sales performance and hence are looking at a bleak future. Most OEMs would agree that now is not a great time to work on a compact sedan but Renault India may prove to be an outlier.
The company may revive its compact sedan project (codenamed LBA) which had been shelved a few months back. The Renault LBA compact sedan will employ the Kwid’s CMF-A architecture with slightly longer wheelbase.
No timeline has been specified yet but even if Renault India chooses to go ahead with the project, LBA sedan is not likely to be ready before 2022 as the automaker will have its plate full until 2021 with introduction of Triber compact MPV and HBC (codename) compact crossover (both based on CMF-A).
The chances of resurrecting the LBA program will depend a lot on the success of Triber and HBC. With the help of new launches, Renault aims to to double the sales to reach an annual figure of 2 lakh units by 2022. The upcoming Triber is expected to bring sales volume of 60,000 units to the table in 2020 (its first full year). The company is hoping the crossover would bring even more sales volume.
The Renault Nissan Alliance’s Oragadam plant has an installed capacity of 4.8 lakh units per annum but neither Renault nor Nissan (including its Datsun brand) has managed to keep the assembly lines busy. So, in order to break even and turn profitable, it is imperative for both alliance partners to improve capacity utilization by driving up sales. With the new products, Renault India’s market segment coverage (total industry volume penetration) would go up from current 24% to over 50%. For FY 2019, Renault captured 2.36 percent market share in Indian auto industry.
