Sales decline, piling stocks results in Renault-Nissan India starting massive lay-offs
Renault-Nissan India’s car and engine manufacturing plant in Oragadam near Chennai was built at an investment of over $1 billion dollars. Inaugurated in the presence of their global chief, Mr Carlos Ghosn, it is the largest plant of its kind in the country.
Commissioned over five years ago, the plant has a capacity to produce 400,000 cars annually. The plant was built keeping in mind Renault-Nissan’s plans for India, which included capturing 5% market share each. But, the situation today is such that each has a market share of less than 0.8% in the Indian auto industry.
Low demand has resulted into sales decline for 10 consecutive months for Nissan India, who also discontinued the Evalia MPV earlier this year for same reasons. For Renault India, car sales have not declined, but have not grown either. This in spite of launching the new Lodgy MPV earlier this year.
As per the report from EconomicTimes.com, Renault-Nissan have thousands of cars lying as inventory at their plant, which includes 5,140 units of Renault Duster and 4,100 units of Renault Lodgy. Apart from the inventory lying at their plant, Renault-Nissan dealers in India have inventory of 10,500 cars.
Renault India and Nissan India give manufacturing contract to Renault Nissan Automotive India Private Ltd. Together, Renault and Nissan were drawing 12,000 cars monthly from their world class plant in Oragadam. But, due to low demand and piling inventory, they have reduced the drawing to just 4,000 units a month.
Hourly production at the plant has also been reduced. The plant, which used to produce 40 cars every hour, now produces 20 cars an hour. The report adds that this has resulted in Renault-Nissan India starting massive layoffs, which could result in firing 3,000 employees.
This news comes at a time when Renault is gearing to launch their most ambitious project in India – Kwid. A small car with 800 cc petrol engine, it will be priced from Rs 3 lakhs. Competing with Maruti Alto and Hyundai Eon, Kwid will be produced from the same plant.