labels: mahindra & mahindra, automobiles - general
Mahindra in pact with Renault to make Logan cars news
Our Corporate Bureau
24 February 2005

Mumbai: Mahindra & Mahindra Ltd (M&M) yesterday announced a 51:49 joint venture with Renault, to produce and sell their car, Logan, in India. Discussions are also on between the two parties to sell M&M SUVs abroad through the Renault''s distribution channel.

At a press conference, Anand Mahindra, vice-chairman and managing director, M&M, said the company''s focus continues to be its SUV business. The arrangement with Renault is for a specific product, due for rollout here in the first half of 2007. "This is a single product alliance for making the Logan. That''s it," said Alan Durante, executive director, M&M.

The Logan, an entry-level C segment car with its production hub currently in Romania, is being primed for a global production figure of 600,000 units in the next two-three years.

In Asia, Iran is set to host a 300,000 unit-strong capacity for the car by 2006. It compares with Mahindra-Renault''s 50,000 units.

The Logan''s multi-location manufacture (in Romania, Russia, Morocco, Columbia, Iran and India) should help tackle the problem of a strong euro as production bases outside can be tapped for component sourcing, Bharat Doshi, executive director, M&M, said. The car is expected to host 55-60 per cent local content within two years of launch. Renault will examine parts distribution from India.

The Rs 700-crore joint venture (investment will be a mix of equity and debt) with M&M as majority partner is different from its earlier a 50:50 partnership with Ford, Mahindra said. Ford India Ltd (FIL), where M&M''s equity stake is now 15 per cent..

In the new venture, M&M will additionally handle finance and distribution. Renault will be responsible for purchase, engineering and quality. The Indian company will have four board members to Renault''s three, and will appoint the managing director, while the overseas firm will appoint the non-executive chairman. While Ford still has a 5 per cent equity stake in M&M, there is no proposal for Renault to do a similar take.

The Logan will be manufactured for a fee at M&M''s Nashik, Zaheerabad or Haridwar facility and sold under the Mahindra-Renault brand. Similar clarity on branding for M&M vehicles likely to sell through Renault''s channels could not be had.

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Mahindra in pact with Renault to make Logan cars