Is the Duster launch proof that M&M-Renault are Bitter Rivals? Naaw.

I was intrigued by this story in The Economic Times.

It starts off by saying that Mahindra & Mahindra –Renault, Tata Motors-Fiat and Hero Honda (now Hero Motocorp)-Honda are all former partners who have turned rivals. Renault's Duster puts the French company on the Scorpio and XUV 5oo turf- but that is all there is to it. To say that just launching one vehicle in a large category where your former partner has a product turns you into a serious rival is stretching the argument too far.

Sure the Duster has been priced pretty aggressively by Renault (Rs. 7. 99 lakh to Rs. 11.29 lakh for the diesel variant. Petrol doesn't matter) and it will create some excitement in the SUV space. But it is still a five seater vehicle compared to competition which has seven seats. Plus, Renault has still got to cover a lot of ground on the distribution front before it can offer any serious competition to M&M or Tata. In my view the XUV 5oo has much better bling compared to the Duster. Interestingly, Renault officials did use the word 'sedan' at the launch...will sedan buyers go for the Duster compact SUV? I think that's an interesting question.

More importantly, Mahindra and Renault are fighting a much bigger battle with the Logan/Verito. Since the last year and a half, both have had a series of disagreements on how M&M should use the Logan platform- the car that M&M got from its failed joint venture with Renault. According to industry sources, while M&M wanted to cut down the length of the Logan, so that it can compete with the shorter Maruti Swift Dzire, Renault wasn’t willing to offer any help on it. In the end the M&M engineers have taken up the task to tweak the platform. A shorter version of the Verito is expected to be launched later this year.

The argument of former-partners-now-rivals goes completely off in the Tata-Fiat case. As far as I understand, Tata Motors vehicles have been competing with Fiat’s vehicles since day one. This is because ll of them were housed in the same showroom and the responsibility of selling both was on the same dealer. In a Tata-Fiat dealership- every dealer has a sales target. And there is huge pressure to sell 200 cars per day, let’s say for the Tata sales staff. It is more likely that they are able to sell only 75 because Tata products are not exactly flying off the shelf. In most cases, there would be five guys from Tata  Motors, chasing this dealer to meet his sales target. So how much attention can he give the two Fiat cars- Linea and Grande Punto?

This is a situation ripe for cross selling. No wonder customers walking in for Fiat cars were being converted for Tata. I have actually seen this happening at one of Tata-Fiat’s largest dealerships in Mumbai. Early this year, Fiat took a decision to break away from its distribution and sales arrangement with Tata Motors to set up on its own. At this stage Fiat hasn’t got many independent dealers. Most people selling Fiat cars are still Tata dealers. To say that former partners are now rivals is incorrect also because the joint venture at the plant (Ranjangaon) between Tata and Fiat is still going strong. Also, a huge chunk of Tata Motor’s domestic sales (in India) is driven by the Fiat power train.

There are better examples of love-hate relationships in the former partners Indian auto industry. Look no further than- TVS-Suzuki, Kinetic-Honda, Hero Motorcorp-Honda and Tata Motors-Mercedes Benz (in the commercial vehicles business).

The thoughts and opinions shared here are of the author.