Hacking India’s Highways in the World’s Cheapest New Car

When Renault looked to take over the country—and build a car for half the price of its cheapest vehicle—it turned to jugaad, the Indian philosophy of low-tech hacking.

Edward Niedermeyer

MUMBAI—From the moment you first step off the airplane, the sounds of India’s traffic filter through the sweltering air. The first far-off honks build with every step toward the exit, and by the time you emerge from the airport the noise of India’s chaotic mobility has become a cacophony of horns and revving engines. It’s the sound of a country on the move.

India’s market for new passenger cars is on track to become the third-largest in the world (after China and the U.S.) within the next decade, growing at nearly double-digit rates. There are so many new vehicles on the roads that 22 kilometers (just over 13.5 miles) of new road are being built each day in India

That might eventually prove to be a sufficient solution, but within minutes of taking to the road, it becomes clear that the problem is as much the kinds of vehicles on the road as the sheer volume of them. Cars and SUVs dodge giant, slow-moving trucks and tractors, while three-wheeled auto-rickshaws and swarms of mopeds and motorbikes flow and filter between everything else, creating a chaotic dance of obstacles and opportunities set to the music of hundreds of honking horns.

Indian drivers approach these challenging and dangerous conditions with a philosophy they call jugaad, which translates to something approximating “hacking.” Two-wheelers slide through impossibly small gaps in traffic and even drive the wrong way into oncoming traffic. Though they use the road more efficiently than cars in urban areas, their traffic-hacking antics can wreak havoc among more ponderous and rule-abiding four-wheeled vehicles, hold up highway traffic and are responsible for the leading and fastest-growing share of road deaths in India (PDF).

India’s mobility needs are still predominantly served by these bikes, which often cost a few hundred dollars in a country with a nominal per-capita GDP of about $1,600.

Transitioning value-conscious Indian buyers out of these dangerous, disruptive two-wheelers and into cars that would normalize Indian traffic toward developed-market standards has proven extremely difficult. The passenger vehicle market in India remains less than a quarter of the size of the two-wheeler market and is dominated by subcompact hatchbacks whose simple and often venerable designs allow starting prices that approach $4,000. This segment was defined by the Maruti Suzuki 800, a low-cost Japanese hatch built locally from 1986 all the way until 2011. Today Maruti has 47 percent market share on its legacy.

Over the last two decades, as India’s economy and demographics have increasingly indicated its destiny as a major car market, almost every major automaker has tried to tap into this deep potential. With the conspicuous exception of Hyundai, which entered the market in 1998 and is now second only to Maruti with a 17 percent share, these efforts have been disappointing. Even the most feared names in the business have found it all but impossible to develop a car for India that can hit the necessary price point while still offering enough advantages to tempt buyers away from established brands and proven offerings.

Since Hyundai’s successful entrance 20 years ago, only one automaker has had any meaningful success attacking this tough market: the French automaker Renault. (Renault provided the vehicle, gas, and road tolls for this story, as well as the correspondent’s airfare to India.) After pulling out of a disappointing joint venture with the Indian automaker Mahindra in 2010, Renault CEO Carlos Ghosn rebooted the company’s entire presence in the country. At the center of the new strategy would be a car that could compete in the tough $4,000 price point, the meat of the Indian market, and the task of developing that car fell to a former math teacher who was approaching retirement age.

Gerard Detourbet joined Renault in 1971, first working on abstract computational research, then doing economic analysis of company investments, and then following his growing interest in the company’s core business to the factory floor. Over the ensuing decades his journey from mathematical abstraction to the art and science of developing and manufacturing cars took him to every corner of the company and all around the world.

He would need that experience to reach Ghosn’s goal: take Renault’s cheapest car and cut its cost in half.

Detourbet, still a mathematician at heart, turned the task into algebra. One variable, the overall cost of each car, was fixed: If the car cost too much, it wouldn’t sell. Other variables, such as the size, durability, and performance required for the Indian market, were given very low levels of flexibility. Making the equation work would come down to squeezing as much flexibility out of every other variable as possible. Detourbet and his team in India would have to do some serious jugaad.

After much study and several rejected proposals, Detourbet and his team came to an unexpected decision: Rather than re-purposing older components whose development and tooling costs were paid off long ago to hit the $4,000 price point, they would develop a brand-new new platform, engine and transmission for it from the ground up. Though Ghosn initially balked, the project was approved because the majority of the cost would have to be spent on a new engine anyway. By starting from scratch the project immediately diverged from the industry’s standard approach to low-cost Indian cars, a decision which allowed the team to design a more modern, spacious vehicle than it would have otherwise.

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The project continued to jugaad away from established industry practices as it became clear that the massive global suppliers which increasingly design and manufacture the bulk of most new cars would not be able to reach Detourbet’s tough cost targets. Instead, he and his team turned to smaller family-owned Indian suppliers that were used to running frugal operations and achieving tough goals. By investing in their management and quality control capabilities and collaborating closely with them to reduce the car to its bare essentials, Renault was able to bring these local companies up to the necessary standards while keeping costs low. As Detourbet’s team collaborated ever closer with these companies to hunt down unnecessary costs, their new partners proved critical in determining which features local buyers demanded and which they could live without.

By collaborating with these local firms, embracing the jugaad spirit, discarding everything that the local market didn’t demand and allowing the flexible variables in the final cost equation to stretch beyond the limits of industry convention (for example, spending more time on development than usual), Detourbet and his team produced a car that has exceeded even their high expectations. Called the Renault Kwid, Detourbet’s modern Model T brought the high stance, spacious body and rugged style of a crossover SUV into a segment dominated by smaller, more conventional hatchback designs. It was an immediate and undeniable hit, boosting Renault’s annual sales in India from just 54,000 vehicles when it debuted in 2015 to more than 130,000 in 2016.

The Kwid may have put Renault on the map in India, but with just 5 percent market share the newcomers have a long way to go to challenge Maruti and Hyundai’s strangehold on sales. And the market leaders aren’t sitting still, revamping their entry-level cars in response to the Kwid’s surprising success. As affordable as these cars are, their customers are used to being fought over: Even if you spend just $5,000 on a new car in India, from any brand, the entire dealership staff stops everything to provide a traditional delivery ceremony to welcome the new owners into the company family. This level of service, which puts any car-buying experience in the U.S. to shame, shows how hard companies like Renault have to work for every new sale.

Meanwhile, India’s government wants to shift the car market to 100 percent electric power by 2030 meaning the next war will be replicating the Kwid’s low-cost appeal in a battery car. Though battery costs are steadily dropping, making an electric car at a comparable price point will make the Kwid’s cost-cutting look easy. When asked if his next project might be a low-cost electric car, Detourbet simply smiles enigmatically. An irrepressible twinkle in his eye suggests that such a project might be the only way to surpass the challenge he faced with the Kwid.

Coming from the U.S., where the average car sells for more than eight times the Kwid’s entry price, it wasn’t easy to calibrate expectations for such a low-cost car. Even so, over the course of nearly a thousand-mile drive between Chennai where the Kwid is made and India’s financial and cultural capital of Mumbai, the little Renault proved to be surprisingly comfortable and competent. Though short on the power and refinement one would want on an American road trip, even with its optional one liter engine, it offered plenty of room for American-sized occupants and all the capability required to tackle India’s madcap traffic for the first time.

Once free of Chennai’s tangle of urban traffic, the Kwid happily cruised across rough two-lane rural highways and larger expressways as fast as traffic would allow. Because slow-moving trucks and two-wheelers could be found in any lane of any road at any time, and are often found in all available lanes simultaneously, speeds above about 70 mph would be difficult to achieve in any car. With enough space the Kwid can be comfortably pushed to nearly 100 mph, but these opportunities are rare and its drivetrain is optimized for the quick acceleration needed to cut through lower-speed traffic. The suspension is similarly optimized to soak up the rough reality of Indian roads rather than deliver sporty cornering, and it shrugged off several terrifying encounters with unexpected potholes and unsigned speed bumps.

Ultimately, tackling India’s traffic for the first time ever was such an intense, consuming experience that the car itself mostly melted into the background. While I was learning how to dodge cows, shoot tiny gaps between massive trucks, and honk in the local language of the road the Kwid was simply an unintimidating and reliable partner. By the second afternoon on the road I too had so embraced the jugaad spirit of the Indian road that I actually reversed into three lanes of oncoming freeway traffic in order to take a narrowly missed exit. It wasn’t an experience I’d look forward to repeating any time soon, but at the time it felt like a rite of passage.

As Mumbai drew closer and the roads became smoother, costlier vehicles pushed up the speed of traffic and for the first time the Kwid started to feel slightly inadequate. But then, the Kwid was never intended to convey bankers or Bollywood stars to their rural weekend homes; it was made for the parts of India I had already left behind, the smaller cities and rural areas where India’s economic development is still only beginning to gain traction. Having just traveled freely across the spectrum of India’s modernization, even the most modest cars suddenly seem to radiate the life-transforming power that made them the symbol of the middle class.

Or is it that the most modest cars actually have the most concentrated form of that power? More than 90 percent of Kwid buyers are purchasing the first car they’ve ever been able to own. And with 97 percent of its parts made in India, a figure no American car can approach, its buyers are not just contributing to their own progress but to India’s as well.

Back home again, sitting in American traffic and wondering when self-driving cars will finally get here, it’s impossible shake the feeling that somehow something is missing. It might just be the sound of horns.