Mumbai: Utility vehicle maker Mahindra and Mahindra Ltd (M&M) has slashed the price of its no-frills sedan, the Logan, to boost plummeting sales after buying out French automaker Renault SA’s 49% stake in their joint venture.
Prices have been slashed by Rs24,000-Rs80,000 across petrol and diesel variants that comply with Euro 3 and Euro 4 emission norms. The new prices will be effective from 26 April, the company said.
Focus on volume: Mahindra’s Rajesh Jejurikar. Punit Paranjpe/AFP
Euro 3-compliant models will be available for Rs4.86-5.65 lakh, while Euro 4-compliant models will come for Rs4.89-5.80 lakh.
In the year ended 31 March, Logan’s sales dropped to 5,332 units from 13,423 units in the previous fiscal. The entry-level sedan segment sold 270,000 cars in 2009-10, an increase of 14% over the previous year, said Rajesh Jejurikar, chief executive of the automotive division at M&M.
Last week M&M and Renault ended their joint venture, Mahindra Renault Pvt. Ltd, which manufactured the Logan. Jejurikar said the buyout of Mahindra Renault will lead to more component sharing and integration of critical manufacturing functions with the parent firm, and help offset Logan’s price cut.
In value terms, 50% of the car’s parts are imported, Jejurikar said. The strengthening of the rupee against the euro will also help offset the impact of the price cut.
By reducing the price, Jejurikar said, the company is “offering a value proposition” to those looking to move from a hatchback to a sedan.
Lower prices are likely to make the car more popular with fleet operators, who currently buy one of every four Logans, Jejurikar said.
Analysts, however, say the price cut will hurt the company’s margins.
Mahantesh Sabarad, analyst at Fortune Equity Brokers India Ltd, said the move may help spur demand, but it will be some time before the benefits of restructuring start kicking in. “The company will have to pay for it in the intervening period.”
Other models in the entry-level sedan segment include the Indigo from Tata Motors Ltd and the Swift Dzire from Maruti Suzuki India Ltd. They are priced between Rs4.50 lakh and Rs6.50 lakh.