|
|
BY OUR AUTOMOBILES CORRESPONDENT
25
Feb 2005: Mahindra Logan, it seems, is going to be a reality, finally. On
Wednesday February 23, 2005, Mahindra and Mahindra announced its joint venture partnership with Renault of France to make the Logan in India. But don’t start looking for the closest dealer yet: the Mahindra Logan won’t be available in India before mid-2007.
Mahindra and Mahindra will hold 51% stake in the Rs 700-crore joint venture project, while the foreign partner Renault will hold the balance 49%.
The joint venture will be called the Mahindra Renault Ltd. This will be Renault’s first foray into India. The existing long-standing multinationals in the C-segment in India are Hyundai, Honda, Ford and Fiat. The project is expected to have a debt equity ratio of 1:1. From the start of the manufacturing itself, the project is pegged to have a localisation content of 50%.
Currently, Mahindra and Mahindra has three manufacturing plants, one each at Nashik, Zahirabad and Haridwar. For producing the Mahindra Logan, M&M will get a contract manufacturing fee. The car will be produced out of one of the three plants. Mahindra Renault plans to sell about 50000 units of Logan every year.
Anand Mahindra, vice-chairman of M&M claims that there is good interest among Indian customers for the Logan. He says that the Mahindra Logan is the world's best value for money car. The company will also have rights to all upgrades of the Logan as and when Renault introduces them.
Mahindra Renault will have a seven-member director board, with Mahindra nominating four members. The rest three will be from Renault.
Mahindra Logan's pricing is still hazy. It is targeted at the bottom end of the C segment, now dominated by the Tata indigo and the Maruti Esteem. In Europe, the Logan costs barely $6100. Even abroad, the car is targeted at the budget segment car buyer. Currently, the car is available is eastern and central Europe, Russia, Middle East, Latin America, North Africa and parts of Asia.
Mahindra’s noble intentions aside, it looks doubtful what market share the Mahindra Renault Logan will be able to carve out. One and a half years’ wait is a long time. By then, expect all existing car majors to roll out dozens of models and variants. Many of them which are currently importing components would have reduced costs by increasing localization. As India becomes more of an auto sourcing and manufacturing hub for the world, spares and final products will turn cheaper in India than abroad. This will reduce the advantage of price margins that the Logan is expected to have. Tata’s Rs 1 lakh car project is also expected to land in 2007. If the one-lakh concept turns successful, more paradigm changes are guaranteed in the pricing space. It’s a tricky road ahead for the Mahindra Renault Logan.
BY OUR AUTOMOBILES CORRESPONDENT
|
