Both carmakers have said that the production move will mean savings for logistics, customs and delivery times, although a recent labour agreement with French unions to increase production in France was among the main reasons for the move.
The Chennai factory has produced the Micra since 2010, when production of the model was shifted there from Nissan’s Sunderland factory in the north of England. Indian production will continue to produce the model for the wider Asian market, said a spokesperson for Nissan, and could see further models or capacity added to it.
“By 2016 the Chennai plant will be at or very near 100% capacity,” a spokesperson told Automotive Logistics News. “In addition to new, not yet announced, production we had two options: either build even more capacity at Chennai or use existing capacity within the Renault-Nissan Alliance. The prudent decision, and the best business case, was to assign some Micra production closer to the market where these vehicles are needed.”
Moving Micra production closer to the European market will bring savings in terms of customs taxes, exchange rates and logistics costs, said a spokesperson for Renault. “The idea is to produce where you sell so that you can be more effective,” she added.
The decision could also reduce lead times on vehicle delivery. The carmaker did experience supply difficulties when it moved Micra production to India from the UK, as stocks of the Micra for western Europe were completely depleted by November that year and did not return to normal levels again until March 2011, though the company said this was down to high demand created by the end of the scrappage incentive scheme in Europe (read more here).
The decision to begin production at Flins follows the conclusion of labour negotiations with unions in France and the drawing up of a new contract, which was signed last month, for growth and social development in the country.
“Part of this agreement was to give more volumes to the French plant,” said the Renault spokesperson. “In terms of volume, what has been mentioned is a volume of 80,000 supplementary units per for the French plant and now Nissan has announced that 82,000 will be produced at Flins.”
Under terms of the agreement, Renault is committed to increase production volume at its French plants by 180,000 vehicles, to 710,000 vehicles per year. The renewal plan calls for 100,000 cars to come from Renault’s new products and 80,000 vehicles from partners.
The Flins plant also makes the new and previous generation Clio and the Zoe electric vehicle, both B-segment passenger cars like the Micra, making integration of the Nissan model a good fit, according to Renault.
The Chennai factory also produces the Dacia Duster, which is exported to Europe. Last month the Renault Nissan Alliance announced that it would consolidate imports of Micra and Duster from India with imports from Japan and Romania at the port of Tyne in the UK (read more here).
