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Renault to focus more on India, Iran

Renault is changing its international structure to help drive sales growth in India and the Middle East, particularly Iran. Starting in September the Middle East India region will be separated from Renault’s Asia Pacific region.

Renault said in a statement that this “will help strengthen operational management and enable dedicated teams to focus on a smaller number of short- and medium-term goals.”

The decision to make Middle East India its sixth region also was influenced by the growing size and importance of Asia and the Mideast to the company.

Renault expects China and India will become the world’s two leading economies within the next 20 years, carrying in their wake countries with strong growth potential such as Indonesia, Thailand and Pakistan.

Between now and the end of the company’s current strategic plan in 2017, China and India “will represent close to 50 percent of Renault Group’s potential for growth – its overall highest,” Renault said in a release.

Bernard Cambier, Renault’s senior vice president for France since March 2009, has been appointed chairman of Middle East India. He has been given a “road map” by the French carmaker that includes focusing on “increasing sales in the short term” in India as Renault introduces new models there.

After freeing itself from a failed tie-up with India’s Mahindra & Mahindra, Renault has bounced back in the market. It ranks as the country’s top-selling European brand because of strong demand for models such as the Duster small SUV.

Renault’s sales in India nearly doubled to 64,368 units last year and its market share rose to 2.1 percent from from 1.1 percent.

Renault and Japanese alliance partner Nissan are investing 2.5 billion euros in its operations in India, where the two companies hope to lift their combined market share to 15 percent by an as-yet-undisclosed future date from 3 percent in 2013. Next year Renault and Nissan intend to launch low-cost cars based on their co-developed CMFA microcar platform, which the automakers say has been designed to meet the needs of emerging markets such as India.

Renault has also given Gerard Detourbet, the man behind the no-frills Duster, Logan and other entry-level cars, a new mission to devise even cheaper vehicles for India that can compete with low-cost Maruti Suzuki and Hyundai models.

Renault makes the Duster at its plant in Chennai, where it produced 67,998 units of the small SUV in 2013. It also makes the Pulse, Scala, Fluence and Koleos there, although combined production of those vehicles was less than 15,000 units in 2013.

Renault also has high hopes for the Middle East region, especially Iran. The company resumed shipments to Iran last January and anticipates volume sales similar to the level achieved in 2011, before international sanctions were put in place.

In Iran Renault produces the Logan and the previous-generation Megane with Pars Khodro and the Logan with Iran Khodro.

Renault sold 100,783 units in Iran in 2012, giving it a 9.8 percent market share. Last year it sold 36,300 units and had a market share of 5.1 percent.

Production by Iran’s car industry, which is well developed compared with the rest of the Middle East, peaked at 1.6 million cars in 2011, the year extensive new Western sanctions were introduced.

Last January, Renault CEO Carlos Ghosn predicted that the Iran’s auto market was poised to grow by at least 50 percent when those sanctions are lifted. Talking at the World Economic Forum in Davos, Ghosn said annual sales in Iran could increase from the current level of about 700,000 to 800,000 cars to “anywhere between 1 million to 1.5 million cars.”

However, Renault is currently seeking a financial partner to help it resume full operations in Iran and is in talks with the U.S. and French governments on the issue, according to Chief Performance Officer Jerome Stoll.

“What we are looking for is a financial partner, who will on their own … comply with all the international regulations and enable us to resume our activities in Iran,” he said in an interview with news agencies. Renault had been approached by Turkish and international banks to help, Stoll added.

The splitting of Asia Pacific operations into two regions also will help the company better position itself in China, Renault said.

It has tasked senior vice president Gilles Normand, chairman of Renault’s Asia Pacific region, to focus on the start of Renault’s new production in China and on “future strategic development in this region.”

With approval granted by the Chinese government at the end of 2013, Renault has begun building a plant in China through its local joint venture partner, Dongfeng Motor.

The new facility has a planned output of 150,000 units a year but Renault has not disclosed which cars will be produced there. Chinese media reports suggest the joint venture will begin output of SUVs and minivans this year.

To date, Renault only has had a limited presence in China, with just 34,157 vehicles sold there last year, up from 27,857 units in 2012. Its 2013 market share, at 0.2 percent, was virtually unchanged.