Mahindra in pact with Renault to make Logan cars

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..