Mumbai: Plans by Mahindra and Mahindra Ltd (M&M) and French car maker Renault SA to restructure the joint venture (JV) that produces the Logan sedan have sparked concern among the largest group of buyers of the vehicle: radio taxi operators.
Taxi operators are fretting about the future availability of spare parts and after-sales service from Mahindra Renault Pvt. Ltd, as the JV is known, and at least one, Carzonrent India Pvt. Ltd, said it was holding back on orders for more cars.
“We shall place orders for the new cars once the (restructuring) issue settles down,” said Rajiv K. Vij, chief executive at Carzonrent, which runs the Hertz radio taxi service with a fleet of 700 Logans.
Renault India country head Marc Nassif said earlier this month that the French car maker was talking to M&M about restructuring the joint venture.
Renault also announced plans to set up its own dealer network in India.
Logan has found favour with radio taxi operators, though its sales have been on a decline in India’s rapidly growing automobile market. The company does not give out segment-wise sales figures.
V-Link Taxi Pvt. Ltd that runs the Meru radio taxis is concerned about the restructuring. It is the single largest buyer of the car, with one in three of its fleet being a Logan.
“We have been asking them about the future plans for six months but haven’t got any answers,” said Rajesh Puri, chief executive officer at V-Link, referring to an assurance from the company regarding availability of spares.
Puri claimed he has not been able to get a “straight answer” from Mahindra officials about spare parts support over the next five years.
Quick availability of spare parts is critical for taxi operators as they typically log more kilometres faster than cars owned by individuals.
“Considering the nature of our business, we cannot wait for spares,” said Puri, adding that his company is exploring the option of importing parts to cut down waiting time.
Nonetheless, he has ordered 550 new cars for delivery by end of March, after the company said it could not supply the 750 Logans he originally wanted to add to his fleet.
M&M denied there was a problem with spares.
“There are no issues on spare parts availability and they are available at dealership,” said Roma Balwani, vice-president (corporate communications), M&M, in an emailed response.
She added that the firm would release an official statement on the way forward for the JV in 30 days.
“Renault and M&M are in the final leg of discussions about the restructuring and the way forward for Mahindra Renault,” said Ashish Sinharoy, a spokesperson for Renault India Pvt. Ltd.
As both firms restructure the JV, industry experts say a shared manufacturing facility is the most likely outcome.
“There are no synergies between the two companies in branding or distribution,” said a partner at a global consulting company, who declined to be named as his company is a consultant to Mahindra, adding that a shared facility would help both sides pare costs.
Typically, an automobile JV has been “rarely been successful”, he said, citing the example of Hindustan Motors Ltd and Mitsubishi Motors Corp. that together make the Lancer. JVs often fall apart when expectations in areas such as technology transfer and product improvements, among other things, are not met, he said.
Reuters contributed to this story.