Renault-Nissan’s CMF-A platform is off to a great start in India, with the Renault Kwid proving to be a big hit and its Japanese sibling, the Datsun Redigo, also finding some success. Renault has more cars on the platform lined up, with a compact sedan being on top of that list. But conditions in the Indian automotive market seemed to have taken a toll, with the group now deciding to shelve those plans.

This is largely due to the implementation of GST and its tax structure, which will mean that the special excise duty benefits enjoyed by the compact segment – sub-four-metre cars with engine sizes lower than 1.2 litre (petrol)/1.5 litre (diesel) – will no longer be there.

Currently, the Indian auto industry has four different slabs of excise duty based on dimensions and engine capacity, ranging from 12.5 percent for small cars, CVs, two- and three-wheelers to 30 percent for luxury cars and SUVs. In addition, the government imposed an infrastructure cess ranging from 1-4 percent for various segments. Under the GST regime, these rates are expected to be converted to a maximum of two rates, thereby making the tax structure on automotive industry more simple and structured. At the moment, there is no clarity if and how the Government will have a lower rate for compact vehicles.

Additionally, recent sales trends in the Indian automotive market have shown that the car buyer is showing a distinct preference for compact SUVs and soft roaders over the compact sedan segment. This has had a direct impact on the once booming compact sedan segment which is now showing signs of saturation.

Thus with these uncertainties and conditions around the compact sedan segment, Renault has put its plans on ice for a CMF-A-based sedan. Of course, this is by no means the last we hear from the CMF-A platform itself. CEO Carlos Ghosn has unequivocally stated, “There will be many more CMF-A cars for India.” If not a compact sedan then perhaps other vehicle variants like a larger hatchback or an SUV/ Crossover could be considered.