Renault SA, the French car maker that launched Logan in a 49% owned joint venture with Mahindra & Mahindra Ltd, India’s largest tractor maker, is scouting for prospective partners to enter the small car segment in India currently dominated by Maruti Suzuki, according to the company’s chief executive officer Carlos Ghosn.
Ghosn, who is also CEO of Japan’s Nissan Motor Co, said the Japanese firm also planned to build two small-car platforms at the factory it is setting up with Renault and M&M in Chennai. He added that the small cars would initially be sold overseas.
Logan, prices of which start at Rs4.28 lakh, is considered to be value for money and seen at targeting the mid-size segment of the Indian passenger car market.
However, the small-car segment is the largest in the Indian market: 77 of every 100 cars sold in the country are small; in 2006, over a million cars were sold in India. Renault, said Ghosn, plans to introduce a small car in India priced at $3,000 (Rs1.28 lakh) at the maximum. Local rival Tata Motors is working on a project to launch a car priced at Rs1 lakh.
“We are looking for frugal product and technology for the small-car segment in India. We value the expertise of Indian companies for producing small cars and we would like to partner with one of them,” said Ghosn. He did not rule out allying with partner M&M for the same. “No decision has been taken for this partnership yet and all possibilities remain,” he said. “It’s possible we could work with Mahindra,” he added. “We will always talk to Mahindra on options.”
Mahindra Renault Pvt Ltd plans to roll out around four-five versions of Logan including a seven-seater one. The company also plans to bring other Renault cars to India. “We have the intention to launch other Renault cars, but we still do not have the plan and strategy for that,” said Ghosn, who expected the joint venture to start making profits from 2008.
Meanwhile, M&M’s managing director Anand Mahindra, who accompanied Ghosn to the Nashik, plant in Maharashtra that will roll out 50,000 Logan cars, said that although his company was open to more alliances with auto companies to enter new segments, it would avoid allying with too many partners. “We don’t want to be promiscuous,” he said. “Having too many conflicting alliances does not help. Right now, our energy is focused on making the Logan a success,” he added.
M&M’s 51% joint venture with Renault prevents it from allying with other firms for sedans and station wagons.
By 2009, Mahindra Renault hopes to make one million Logan cars in India. This is apart from the Chennai plant which will roll out 400,000 cars for Mahindra, Nissan, and Renault in the next seven years. Ghosn said that low-cost countries such as India, China, Thailand, and Brazil would become major players in the global automotive industry.
Bloomberg and Reuters also contributed to this story