New Delhi: French car maker Renault SA’s chief executive officer Carlos Ghosn admitted to differences with India partner Mahindra and Mahindra Ltd (M&M), with which his company has a joint venture to make the Logan sedan in the country.
“We are not saying that our partnerships are going exactly the way we want them to go,” Ghosn told reporters on the sidelines of the World Economic Forum’s India Economic Summit on Sunday.
Renault is in talks with partners on how to overcome the differences, he said. “But I don’t want you to think that this is something surprising. This is part of life.”
The two sides are trying to see how to make the Logan more appealing to Indian buyers.
Clearing the air: Renault CEO Ghosn?says?the firm is in talks with partners on how to overcome the differences. Rajkumar / Mint
“We are also discussing with our partner Mahindra what needs to be done to modify the product but we have the patience and the determination,” Ghosn said. “I never thought that coming to India, we are going to get everything right for the first time. Nobody gets it first time right in any country and particularly in a country with a long history and tradition like India. We are not naïve to think that whatever we undertake is going to be successful in the first time.”
The chief of Renault and Nissan Motor Co. had hinted at last month’s Tokyo Motor Show about the possibility that his companies may lose some of its partners in India.
“I am not saying we will, I am saying we can. I don’t want anybody to be surprised. We have today three partners (in India). Our intention is to continue with the three partners, but if it is not possible, I can tell you that we need at least one,” Ghosn had said at the show.
M&M president (automotive sector) Pawan Goenka told reporters at the summit to ask Ghosn about whether there was any strain in their partnership. In the past Goenka has also said that they are in talks with Renault to introduce new models in the Indian market. So far, the joint venture partnership, Mahindra Renault Pvt. Ltd, is restricted to only the Logan.
The venture has been hit by the poor sales of the sedan and there has been intense speculation on its future. In the fiscal year ending 31 March, 2009 it made a loss of Rs490.21 crore. Sales stood at Rs741.17 crore.
At the time of the launch of Logan in 2007, the joint venture was targeting 50,000 units a year. According to the India Infoline auto sector monthly update for October, sales of the Logan dropped 68% year-on-year to 401 that month from 1,067 from a year earlier.
The French car maker has other alliances in India, including one with Bajaj Auto Ltd for a small car project and one with Ashok Leyland Ltd for light commercial vehicles. Bajaj and Renault have had disagreements related to branding of a low cost car they plan to launch in 2011.
On the company’s commitment to launching a low-cost small car in India, Ghosn said: “The entry price point, which will be $2,500, is still very important...not only for India, but also for a lot of emerging markets.”
Ghosn also said Nissan plans to suspend the construction of the second phase of its factory being built in Chennai until global demand for automobiles recovers. Nissan expects to export 110,000 units a year in the year ending March 2011.
Expressing confidence in India’s automobile market, Ghosn said the current market size of two million units a year will treble to six million within 10 years.
However, he also said that India should develop the infrastructure required to accommodate the growth.
PTI and Bloomberg contributed to this story.