| Renault senior vice-president Luc-Alexandre Menard (centre), M&M vice-chairman and MD Anand Mahindra (right) and president (automobile) Alan Durante join hands after the announcement of a tie-up between Renault and M&M in Mumbai on Wednesday. (AFP)
Mumbai, Feb. 23: Mahindra & Mahindra (M&M) today sealed a pact for a joint venture that will produce Renault's Logan, a model seen to rival the likes of Tata Indigo. The first car could roll off the assembly line in 2006-07 at a factory that the Renault-Mahindra venture will set up.
For the Mahindras, who will hold 51 per cent in the company, the deal marks the return of the multi-utility vehicle major to cars, a business in which they had an unsuccessful tie-up with Ford. That failure prompted them to embark on a drive to make Scorpio, their first sports utility vehicle designed and manufactured in-house.
Today, as the wheel came a full circle, Anand Mahindra, vice-chairman and managing director of M&M, was confident that the globally popular Logan would have a dream run in India. One of the reasons could be the price ' the five-seater sedan comes for only Rs 3.43 lakh.
There is no word on how much buyers will have to shell out here but, as M&M chief operating officer Pawan Goenka said, the price is decided 'the midnight before the launch'.
The Mahindra-Renault venture, which will be limited to the Logan rollout now, will take Rs 700 crore to get going. However, officials indicated that Renault's sales network could be tapped for the sale of the Scorpio in France.
Logan will have a high local content, possibly 50-60 per cent. The site of the factory has not been decided but the choice appears to have narrowed down to the Mahindras' plant at Nashik, their unit at Zaheerabad in Andhra Pradesh or a still-crystallising Uttaranchal facility.
Logan will not be restricted to India. Renault plans new factories in Iran, where 300,000 lakh units could be made every year; the model's global sales could cross 7,00,000.
In its quest for affordability, the French auto major has kept a tight lid on costs by developing the Logan in Romania, where it acquired Dacia and refurbished the company's plants in an exercise that took little out of its coffers. The capacity of the factory in India, where Renault engineers will help the Mahindras develop a right-hand drive version of the Logan, is put at a conservative 50,000 cars.
The Mahindras' relationship with Renault goes back several years. Engines made by the French auto major power the petrol versions of M&M's sports utility vehicles.
Asked about the stake that M&M still holds in Ford's India business, Mahindra said the shares are merely a portfolio investment. 'At the time the Scorpio project was conceptualised, we needed to prioritise our own resources. So, we consciously we took a path different from Ford.'