Renault urges regulatory clarity in India after costly airbag decision

Renault India investment: French automaker Renault is calling for regulatory discipline in India as it faces unnecessary engineering costs due to New Delhi's decision not to implement a proposal mandating six airbags in cars, according to Venkatram Mamillapalle, the company's country head.

Renault's regulatory concerns

Renault, holding less than a 2 per cent share in India's competitive auto market, is gearing up for additional investments. However, the automaker is reconsidering its approach to regulatory changes following New Delhi's postponement of the proposal to mandate six airbags in all new cars sold after October 1, 2023.

Sunk costs and U-turn strategies

The delay in finalising the airbag proposal led to sunk costs for Renault in terms of engineering. Mamillapalle explains that the company is now taking a U-turn, offering six airbags as an option for customers rather than a mandate. In the future, Renault plans to await final regulations before making significant investments.

Government's role in regulatory pathways

Mamillapalle emphasises the importance of the government adhering to regulatory pathways it lays down. The call for clarity comes as Renault prepares for increased investments in India's growing automotive sector.

Broader industry concerns

Renault's concerns align with broader apprehensions within the automotive industry. Last year, Union Minister Nitin Gadkari's comments on higher taxes for diesel vehicle production led to a stock market rout, showcasing the industry's vulnerability to regulatory uncertainties.

Renault's Growth Plan

Despite a decline in domestic sales last year, Renault is strategically focused on profitability over market share. The company plans to launch upgraded variants of existing cars in 2024, including the Kwid, Triber, and Kiger, featuring enhanced technology and connected features to attract entry-level car buyers.

Future investments and global expansion

Renault, in alliance with partner Nissan, aims to invest $600 million in India over the next three years. The investment will support the launch of five new cars, including mid-sized SUVs and electric models, starting in 2025. Renault anticipates continued investment in India beyond 2027 as part of a global plan to allocate $3.2 billion in markets outside Europe.

Renault's commitment

Mamillapalle assures stakeholders that Renault's strategies are well-built and robust, emphasising the company's long-term commitment to the Indian market. Despite challenges, Renault remains steadfast in its presence and growth plans in India.

Investors and industry enthusiasts will be closely monitoring Renault's response to regulatory shifts and its execution of planned investments as the company navigates India's dynamic automotive landscape.

(With Reuters inputs.)