There has been a lot of talk about disrupting the auto industry. If you want to see disruption in full-scale beauty, you must go to Chennai, India. The city formerly known as Madras has become a veritable hotbed of automotive disruption, and not just because the mercury constantly flirts with the 100 degree mark. Some 30 dusty, and very nerve-rattling miles south of the airport is the Oragadam Industrial Corridor, and right in the middle of it is Renault and Nissan’s joint production site, which is trying to crank out the $4,100 Renault Kwid as quickly as it is snapped up, usually by first-time buyers, who finally can afford a real car.
Some 40 years ago, we finally could afford a real computer, 64K and all — now a real car can be bought at a similar price.
For those who think the outrageous price is not low enough, the factory has just started to produce a $3,700 derivative, the Datsun Redi-GO. Both are real cars, on a brand-new platform, and they already disrupted the marketing plans of Maruti-Suzuki, which until now has dominated the rapidly growing Indian car market, but probably not for a lot longer. (The secret of how Renault-Nissan has achieved the cars’ ultra-low price is revealed here. But does Renault-Nissan make money with the cars? The answer is here.)
Both cars are brainchildren of Frenchman Gerard Detourbet, the antithesis of the cliched Silicon Valley disruptor. When Detourbet was born in Paris in 1946, the Germans had barely left town. He became a teacher of mathematics, and it still shows when he takes to the white board, to describe the secrets behind the Kwid’s pricing in mathematic formulas that require an understanding of algebra I failed to achieve. Detourbet came to Renault in 1971 to teach computers, but it quickly became evident that he was destined for much more. So he was put in charge of production, and then the development of powertrains.
In 1999, Dacia, a down-and out pet project of deposed Romanian strongman Nicolae Ceausecu, was bought by Renault at scrap value. The Soviet Empire was crumbling state by state, and global automakers picked up the brands for cheap that would aid them in flooding the East with their four-wheeled products. Originally, Renault had planned to buy the likewise downtrodden Czech Skoda, but it was edged-out by Volkswagen.
The old Dacia cars were unsalable, even in Russia, so Detourbet was chosen to come up with a new platform for entry-level cars, sold in Europe under the Dacia brand, and in emerging markets as Renaults. The first car was the Dacia Logan, a car that quickly swept Europe and the world, in the guise of a multitude of brands, badges, and bodies. Powered by a price half of what comparable models did cost, the car sold more than 3 million times.
By 2011, Detourbet was turning 65 and it was time to think about retirement. He decided to stay on a little longer, until next year, when the new Logan would be introduced, and then he planned to head to the south of France, where his Parisian family maintains a house near Cannes. That plan was nixed by Renault CEO Carlos Ghosn, as Detourbet told me:
“A challenge was given by Carlos Ghosn to both Renault and Nissan to design an affordable car, able to compete in the A class, an entry car in most regions. In many parts of the world, this is the highest volume segment. The cars often are on very old platforms to keep the price down. The way to enter the market usually is to ‘do new with old’ — don’t spend a lot of money, manage with what you can find, old technology in slightly newer clothes.”
Eventually, it was not just a car that was developed, but a whole new platform, and even more than that. At the time, modular platforms had come into vogue in Europe and Japan, following the wake of the trailblazing Volkswagen MQB “building kit.” Ghosn’s challenge begat the new CMF-A architecture, as in “Common Module Family” for all A class cars in the Renault-Nissan Alliance’s far flung global empire.
The dominant car in India is the Maruti 800, an old derivative of tiny Japanese Kei cars. Hyundai’s best-seller in India, the i10, “sits on a platform more than 25 years old,” Detourbet said. Together, Maruti-Suzuki and Hyundai command a 65% share of the Indian market. A gaggle of hopefuls carve up the rest, frantically fighting to improve their single digit shares of a market with 1.3 billion people, widely regarded as the world’s most promising for cars. In 2011, Renault and Nissan together had less than a 1% share of the Indian market, and the new A-class car was supposed to change that, in India first, and elsewhere thereafter.
Detourbet got to work, together with his trusted sidekick of many years, Arnaud Deboeuf. He came from the purchasing department at Renault Samsung Motors in South Korea, and Detourbet could use his Asia-trained bargaining skills. The two embarked on a project to outdo themselves: Make a car at half the cost of Renault cheapest car, the Logan, a car that itself did cost half of what the competition commanded.
In the beginning, it was a race between Nissan and Renault. Nissan had a lot of incentive to get with the program. It just had resuscitated is Datsun brand for cars targeted at emerging markets, and it needed cars.
“Both companies started to work, separately,” Detourbet remembered. “All Nissan could use was an old Micra. They started to work with an engineering company called Defiance, people with experience in making components, but not whole cars.”
At the same time, Detourbet and Deboeuf tried one more time to make do with recycling the cheapest platform of Renault. “We already had tried that 2 times before,” Detourbet recalled, “and we found out yet again that it was simply too expensive, and impossible to squeeze it into the dimensions mandated by markets and regulations.”
In their minds, they scrapped the hand-me-down platform, and they dreamt of a completely new, built from ground-up architecture. That idea quickly turned into target practice at Renault’s headquarters in Paris.
“We proposed the new platform to Carlos Ghosn. First proposal — we were thrown out. Second proposal – we were thrown out again.“ The CEO was not amused: “I asked you to use something old, and you try to sell me on new car. That’s not what I want,” Ghosn told the D&Ds.
The D&Ds would not listen. The third time around, the desired aha effect finally was triggered in the Alliance’s tough chairman and CEO of both companies. Detourbet and Deboeuf made the point that the project would “need a new engine which already reflects 70% of the cost,” the new engine would need a new platform, and they could do it with the remaining 30%.
Ghosn gave them a green ligh.
With that, Detourbet and Deboeuf embarked on another mission impossible — at least that’s what it would have been at most other car companies, as Detourbet explained:
“The problem was that we needed to develop a platform, and an engine, and a gearbox, all at the same time, and that’s what normally is absolutely prohibited. When we develop a new engine, we install it in an existing platform, but we never develop platform, engine, and gearbox at the same time, and in a very short time to boot.”
By the end of 2011, CMF-A was greenlighted, “8 to 9 months from question to solution,” Detourbet remembered. “I was assigned to the project, and I took the decision to postpone my retirement.”
(Four years ago, I wrote that Detourbet had already been retired, before he was reactivated by Carlos Ghosn, a mistake for which I now could apologize profusely to the man himself. He doesn’t look like someone who would ever retire.)
In May of 2012, Detourbet moved to Chennai, India, and he started the “design to cost” project, which is partly described here. After 12 months, the CMF-A platform was ready for action, not just on paper, but also in the spreadsheets of the cost controllers. The engine took three months longer.
“Mid 2013, I showed the first mock-up to Carlos Ghosn in Paris at the styling center,” Detourbet reminisced. “He said ‘we can do that for the money? OK, go.’ Everyone had expected not a real car, but what I showed them was a real car. It looked very good, and it is very good. It’s more than an A segment car, it looks like a small B car, or an A+.”
The fact that the CMF-A platform was blessed by the highest authority at Renault did not protect it from torpedo broadsides from within the company, as Detourbet revealed:
“One time people showed up here in this meeting room, 15 or 20 of them arrive from the headquarters, product planning and brand image people, and they tell me, ‘Gerard, your car is not a Renault car. You have no electrified external mirror.’ I told them it’s useless, people don’t use it. I won’t put money into something that is not being used India. They go on about brand image. I say no.”
“After a difficult discussion, they went back to Paris. A month later, the chief of the region wants to see me to discuss a lot of things, face to face. I come back to this room, and I am facing the same people that were here before. He tells me I must modify the car. I say no. I tell him, if you want, you can go to the very top of the company. 5 minutes later, the meeting is over.”
“A month later, I receive a letter coming from corporate HQ with the minutes of a meeting with Carlos Ghosn and Carlos Tavares. The conclusion of the meeting was very simple: Only the leader can decide what is in the car. If he says no, he says no. That’s it.”
In 2014, the car went into what Renault calls the “industrialization phase,” the process of turning a prototype into a production process that spits out finished cars at the end. Most of the stamping tools came out of Nissan’s Zama factory, some 20 miles west of Nissan’s Yokohama HQ. The remaining tools came from Renault’s operations in South Korea. At Zama, Nissan builds all its secret prototypes, it also makes a few of the Leaf’s batteries there. “In one part of the factory, people developed the tools, and the first stampings,” Detourbet recalled. “Next door, people developed the assembly jig. And next door again, we had people develop the production plant. A perfect way to do something like that.”
Tesla fans are made to believe that the tooling of a car can be finished in one month, and that miraculously, mass production of the car will start in the month thereafter. They should pay attention to a little detail Detourbet imparted on me next:
“In September 2014, all tooling of the Kwid was shipped to Chennai and introduced to the line. We spent a lot of time to obtain the targeted level of quality on the line. Start of production was September 2015.”
This is normal in the industry.
The Kwid was launched in October 2015, to rave reviews in India. In the First World, the media was focused on Tesla, which barely cracked 50,000 in that year. The truly disruptive Kwid was feted in India, and largely ignored elsewhere. By the end of 2016, the Kwid had sold more than 100,000 units in India, a little less than half of the country’s best-selling Maruti-Suzuki Alto, and it accounted for 75% of Renault’s volume in India. A slightly shorter and even cheaper Datsun on the CMF-A platform was announced in 2016, and it rolled off the line at the Chennai factory when I visited.
Kwid and Redi-Go are made on one line in Chennai. Eight other cars by Renault, Nissan, and Datsun are made at the same time at another line. There are many more robots, made by FANUC, on the eight-car line, but strangely, the CMF-A line runs faster. “Those robots slow the process down a bit,” explained Stephane Durand, Chief of Process Engineering, as we walked through the plant. “Flexibility has its price.”
Outside, ground has already been broken for the addition of a third line, also dedicated to CMF-A cars. The current CMF-A line will top out at 300,000 units per year, and with the Redi-Go, and further planned Kwid derivatives, the exhaustion of that capacity is in sight. Powered by the CMF-A platform, the Renault-Nissan Alliance has achieved a nearly 7% market share in India by the end of last year, outpacing Toyota, Tata, Honda, Ford, and Volkswagen. By the end of this year, it most likely will be India’s 3rd-largest, overtaking Mahindra. Worried about the disruptive powers of the $4,100 Kwid and $3,700 Redi-Go, Indian market leader Suzuki had to lower its prices to defend against the onslaught, I was told in India. The Kwid already is being exported to many markets, and so will be the Redi-GO. A CMF-A line in Brazil appears to be in the works.
The CMF-A platform, developed by a 118-year-old carmaker, and a 71-year-old Frenchman, are the true disruptors in the auto business. Some will debate this claim.