In a move that is estimated to generate 2,000 additional jobs, the Renault-Nissan alliance is investing Rs 5,300 crore in Tamil Nadu to modernise its plant near Chennai.
The plan is to make six new models, with Renault and Nissan making three models each, aimed at domestic and international customers, including two small electric cars. The first model will be rolled out in 2025. A memorandum of understanding was signed between the TN government and Renault-Nissan in the presence of Chief Minister M K Stalin in Chennai on Monday.
The Renault-Nissan alliance officials exchanged the MoU with the state-promoted nodal agency Guidance Bureau’s managing director and CEO Vishnu Venugopal. The plant’s modernisation will boost automobile exports from TN as the alliance hopes to increase its production capacity.
The two firms are also restructuring their joint manufacturing and research and development arms in India to make them equal partners. Under the new framework of the agreement, Renault Nissan Automotive India would move to ownership of 51% Nissan and 49% Renault from 70% Nissan and 30% Renault.
The much-needed investment in the sector comes as Ford has closed down its Chennai plant operations in Maraimalai Nagar. The current utilisation of the plant is 47% and the plan is to increase it to 80% with the introduction of new models.
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It will also make the Chennai manufacturing facility transition to 100% renewable energy by 2045. S Krishnan, TN industries secretary, said, “The new proposal of modernisation and fresh investment by the Renault-Nissan alliance brings to life ‘Make in Tamil Nadu’ and ‘Make in India for the World’. He said the alliance has been one of the mainstays in ensuring that TN remains the automotive capital of India and an important hub for the manufacture of automobiles and auto components and automobile design as well.
“By 2030, Nissan will have 44% of its product mix as electrified cars. By 2025, we will be ramping up our products with the launch of the first of the six models built on common Alliance platforms while retaining the individual, distinctive styling of the respective brands,” said Nissan Global CEO and member, the Alliance board, Ashwani Gupta.
The alliance plans to be more competitive in the electric car market by managing vertical integration of the entire supply chain. This includes manufacturing of batteries, vehicle manufacturing, safety-assisted technologies and automated driving technologies, he said.
Over the last 15 years since the alliance came into being in Chennai, it faced a leadership and financial crisis in 2018-19 resulting in changes in the business strategy. “Prior to 2018, we would have gone for big investment driven by volumes. Now the change in volume will be the consequence and not the objective. This will be based on how the alliance creates value together. The idea is to create high-value projects and focus is not on mere synergies but synergies based on performance,” said Gupta.