Customer Logins
Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Customer LoginsRenault India makes foray into pre-owned car business, eyes fleet segment for Lodgy
The used-car business may eventually play a crucial role in taking Renault's brand deeper into India.
IHS Automotive Perspective
- Significance: Renault India has made a foray into the pre-owned car business by opening its first outlet under Renault Selection in Bengaluru, Karnataka. Separately, the automaker is increasingly looking at ways to boost sales of the Lodgy multi-purpose vehicle (MPV).
- Implications: Despite its success so far in India, Renault faces challenges to its used-car business from an unorganised market as well as from established players such as Maruti Suzuki and Mahindra.
- Outlook: The used-car business may eventually play a crucial role in taking Renault's brand deeper into the country. Meanwhile, the automaker's efforts to address weak demand for the Lodgy MPV are likely to yield results by boosting sales to government fleets and organisations.
Renault has made a foray into the pre-owned car business in India. In a statement on its website, the automaker said it had opened its first outlet under the business, named Renault Selection, in Bengaluru, Karnataka. As well as offering a platform for buying and selling pre-owned Renault cars, the business will also cater to customers who are willing to sell used cars from other brands in exchange for a new Renault car. Under Renault Selection, the French automaker will also provide its customers with finance, insurance, warranty, and roadside assistance.
The French automaker plans to start operations under its used-car business in Jaipur, Nagpur, and Chandigarh, although it did not disclose specific details about expansion in these cities. Nevertheless, it plans to open 20 outlets by December 2016 and this number is expected to expand to 50 by 2017, company executives told NDTV.
"Renault is pursuing an aggressive growth strategy in India and we are entering new businesses in the automotive space to best serve the Indian customer," said Renault India CEO and managing director Sumit Sawhney. The pre-owned vehicle market in India has steadily gained momentum over the past few years and has seen the emergence of several matchmaking players with online and offline models, while OEMs have also started looking at the business more favourably. "Estimates suggest that the pre-owned car market is nearly three times the size of new car volumes in Western Europe, the UK and the US," said the Renault executive, adding, "In India, the used car market is already more than the new car volume and it is estimated to reach twice the size of the new car market within the next five years. Given this, Renault Selection will play an important role in building the Renault brand in India."
Separately, the automaker is looking at ways to boost sales of its Lodgy multi-purpose vehicle (MPV), including targeting government organisations and introducing a semi-automatic transmission. "We have got approvals to sell this vehicle to government organisations. We will also start selling it soon to the fleet owners as well," Sawhney was quoted as saying by the Economic Times. Quoting unnamed sources, the report says that Renault may bring out an automated manual transmission (AMT) version of the Lodgy by early 2017.
Outlook and implications
Renault India's decision to move into the used-car business comes at a time when the automaker is receiving massive tailwinds from the recently launched Kwid hatchback. The sport utility vehicle (SUV)-shaped vehicle competes in the small-car segment against offerings from market leaders Maruti Suzuki and Hyundai. Given a relatively brief independent history of just five years in India, Renault has decided to move into the used-car market. Given the rapid expansion of the secondary market, thanks to rising income levels and quicker upgrading cycles among customers, the used-car business may eventually play a crucial role in taking Renault's brand deeper into the country. However, the business is far from easy and Renault faces stiff competition from established players in the form of Mahindra First Choice and Maruti True Value.
Meanwhile, Renault's efforts to boost sales of the Lodgy MPV reflect the general challenging market conditions for this segment. The vehicle, launched in 2015, has seen its monthly sales volumes slide from 1,000 units to just 400 units. Targeting fleet owners with specific solutions is likely to be helpful, as is supplying government organisations. The availability of a semi-automatic AMT option should also brighten the model's prospects, although there is no successful precedent of AMT use in the Indian MPV segment. Nevertheless, the technology has become very popular in vehicles meant for private usage, specifically hatchbacks, sedans, and SUVs. Renault introduced the technology on its Duster SUV, while it also showcased a Kwid variant with AMT earlier this year and plans to bring this model to market later in 2016.
About this article
The above article is from IHS Automotive Same-Day Analysis of automotive news, events and trends, and is a deliverable of the World Markets Automotive Service. The service averages thirty stories per day and also provides competitor and country intelligence. Get a free trial.