Failing to gain a strong foothold in the domestic market, the Indian unit of French carmaker Renault reported an over twofold increase in its losses to Rs 850 crore for the fiscal ending March 2018, owing to stiff competition and subdued demand for its existing product pipeline. The company’s net loss during the fiscal 2016-17 was Rs 360 crore.
Notwithstanding the modest success of its compact SUV Duster, Renault India’s revenue from operations during the year slumped 10.59% to Rs 6,904.3 crore against Rs 7,722.1 crore in the year-ago fiscal, documents sourced from the corporate affairs ministry showed.
The company, which aims to gain at least 5% share in the Indian market, has constantly seen its performance crumble, owing to deficient brand image, product gaps and vigorous competition in every segment from players including Maruti Suzuki and Hyundai. “These losses incurred by the company are towards establishing the business strategy and creating a market position in India,” Renault India said.
In FY18, when the passenger vehicle market grew by around 8% year-on-year, Renault India’s domestic sales fell around 25% y-o-y to 102,222 units. Production also declined 22% y-o-y during FY18, data from Society of India Automobiles (Siam) showed.
Even during the April-November 2018 period, the company’s production and domestic sales declined 26% y-o-y.
When contacted, a Renault India spokesperson told FE, “Renault is still investing in India for the future and targets to be profitable but not before 2020”.
Renault India, which plans to make India an export hub for emerging markets, also saw a hit on exports with negligible growth during the previous fiscal.
With little success so far, the company’s management plans to launch new models with hopes of a turnaround in the years to come. “The company has plans to launch new models over the next few years and consequently believes that this may have a significant potential to generate additional revenues in future,” Renault India said.
Though the carmaker reported a loss of Rs 360 crore in 2016-17, it performed better from 2015-16 when it had reported a net loss of Rs 963.8 crore, documents from business intelligence platform Tofler showed.
Sales of its popular vehicle Kwid have weakened because of an overall decline in the sales of mini or small cars. Demand for the models such as Captur and Lodgy also remained subdued during the year. Compact SUV Duster did taste success, but overall volumes remained under pressure owing to poor performance of other products.
Source: financialexpress.com