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Thierry Bollore, the Chief Executive Officer at Renault revealed during the launch of the Renault Triber, that the company will stop retailing diesel cars starting 1 April 2020.
According to AutoCar India, Mr Bollore feels that the decision complements the company's policy of eventually phasing out diesel cars, globally. He said,"Diesel sales are naturally decreasing as a percentage of sale because of regulations and we have decided to limit the development of diesel engines for the future."
The only diesel engine in the Renault-Nissan stable is a 1.5-litre K9K. This engine is featured in a range of models like the Duster, the Captur and the Lodgy. Killing this engine will have certain consequences.
As far as Nissan is concerned, the 1.5-litre K9K engine powers a small volume of the Micra, the Sunny, and the recently launched Nissan Kicks (which has not done as well as the company thought it would). Discontinuing the K9K could mean a disaster, and suppress whatever demand is left for the Kicks, which happened to retail 166 units in May 2019.
The future of the K9K engine depends on whether it can meet BS-VI norms or not. The company's original plan was to make the K9K engine BS-VI compliant by using the SCR system that is being used in Europe to meet Euro VI standards. However, the drop in K9K volumes in India has deemed the SCR option useless.
Sales of K9K powered cars dropped from 18,386 units during the financial year 2017-18 to 11,892 units during 2018-19, ergo Renault feels the cost impact of developing an SCR system for these smaller volumes would price key models like the Duster would not be worth it.
In addition, the fairly poor performance of the Nissan Kicks has added pressure to the Renault-Nissan alliance.
Venkatram Mamillapalle, CEO and MD, Renault India, said during an earlier interview, "The RNAIPL (Renault Nissan Automotive India Pvt Ltd) plant has a capacity of 4,80,000 units and the break-even comes from there, so the most important thing for me is to fill the plant capacity."
"And it doesn't help me if Nissan and Datsun don't perform; it hits me very badly. We are still trying to meet BS-Vi with an LNT. If we can manage, diesel will stay," he added.
The thought of an SUV line up without a diesel engine could be a potential setback for both Renault and Nissan. However, Renault's focus now is its budget car portfolio. The recently launched Triber could be Renault's next big hit, something the company has been looking forward to. The company hopes it will double it's sales in India.
Thoughts About Renault Terminating Their Small Capacity Diesel Fleet
This was some what expected. Renault did really well with the Duster but we doubt the company is profitable. Ford took 20 years to turn profitable in India, and we feel Renault needs more time. Renault has made a right decision of moving out of the small capacity diesel engine space.