RENAULT SET
TO DRIVE INTO INDIA
Mahindra is all set to finalise its joint venture with French
auto major Renault. The utility and farm equipment major is
likely to form a 51:49 joint venture with Renault to manufacture
the low-cost sedan, Logan, in India, with the Indian company
holding the majority stake.
The JV will be funded by a $100-million FCCB,
the company raised last year. A formal announcement is likely
by the middle of next week.
Though the manufacturing location and production
details are still being worked out, sources indicate that
M&M may zero in on a new greenfield site or share the
spare capacity of an existing plant. M&M plans to launch
the Logan, in 2006 with 85 per cent localisation. Company
officials were not available for comment.
M&M's JV with Renault marks its comeback
into the car segment after it parted ways with Ford a few
years back. Sources say while the negotiations have been on
for nearly eight months, it had started to flounder mid-year
on issues of stakeholding.
Industry sources confirm that the Logan will
be sold through the Mahindra dealership network and will probably
boast co-badging by Renault and Mahindra.
The low-end sedan, launched for as little
as $6,100 in Eastern Europe for the base model (without power
steering, AC, stereo, power windows and ABS), will offer M&M
an aggressively priced model in the fast growing volume-end
of the C-segment, where models like Hyundai Accent, Maruti
Esteem, Tata Indigo and Ford Ikon currently rule.
Logan's India run is expected to be crucial
for Renault, given the car's emerging market focus. Launched
in June last year, the three-box car fitted with a 1.4-litre
Renault engine, is targetted to sell 7,00,000 units a year
by 2010 in seven emerging countries across Eastern and Central
Europe, Russia, the Middle East, Latin America, North Africa
and, of course, Asia.
Given that M&M's bread and butter products
are utility vehicles, with the urban-focussed Scorpio in the
higher Rs 6-7 lakh price range, the Logan will not cannibalise
M&M's products . On the other hand, the product line will
help the company keep the markets busy until its next platform
is ready, say analysts.
In North Africa and central Europe, Logan
will be sold under the Dacia brand – the Romanian state-owned
car company in which Renault acquired a controlling stake
for $50 million in 1999.
In countries such as Russia, where the Logan
will be priced in the $9,800-$12,250 bracket, the car could
be sold under Renault's own name.
