| Carlos Ghosn (right), head of automakers Renault and Nissan, with Anand Mahindra, vice-chairman and managing director of Mahindra & Mahindra, in Paris on Thursday. (AFP)
Mumbai/New Delhi, Nov. 9: Renault SA, the second-largest automobile company in France, and Mahindra & Mahindra (M&M) are taking their 19-month relationship that was forged in March 2005 to a new level.
The two automakers are planning to establish a greenfield site in India within five years that will produce 500,000 units every year. Nissan Motor of Japan, in which Renault holds 44 per cent, is also expected to join the venture.
Renault and M&M announced in Paris that they would produce both Mahindra as well as Mahindra-Renault products at the plant but didn’t say how much they planned to invest. However, analysts estimate that the new project would involve an investment of Rs 2,500 crore.
Renault and M&M are already planning to launch the Logan early next year in India which will be manufactured at the Indian automaker’s Nashik plant. The plant will produce 50,000 Logans a year initially.
Sources said the new plant would be used as a platform for exports but did not rule out the possibility of other Renault branded cars being sold in India. Rumours have swirled that Renault could introduce the Twingo — its popular runabout — and the Clio in India.
The two automakers signed a memorandum of understanding in the French capital to establish a “long-term strategic partnership in India”.
Under the agreement, the Mahindra group will hold a 50 per cent stake and the rest will be earmarked for “the alliance”, said a press release, which could mean that Renault and Nissan could together hold the other 50 per cent.
Renault president and CEO Carlos Ghosn said: “I am delighted to announce the deepening and enlarging of our partnership with Mahindra in what I see as a great opportunity for Renault’s development in India. This gearing up of our presence in one of the fastest growing markets in the world is key to our commitment to international growth.”
Anand Mahindra, vice-chairman and managing director of M&M, said, “The success of this partnership is scripted within the India growth story and Mahindra & Renault’s shared vision for its customers. It is a chemistry that we discovered when the Mahindra-Renault joint venture was born. Besides, the strengths of Mahindra and Renault will go a long way in making India a key global automotive market.”
The new production site will include a vehicle assembly plant shared between the two partners. Renault also plans a power train factory. Production is expected to begin by the middle of 2009, with an initial installed capacity of 300,000 vehicles a year. The product range will be marketed by Mahindra-Renault and sold through the Mahindra channel network throughout India.
Nissan, which is Japan’s second biggest automobile manufacturer, today snapped talks with Suzuki Motor Corporation (SMC) for a project which would have seen Suzuki build Nissan’s small cars in India. According to a statement issued by Maruti Udyog Ltd (MUL), Suzuki’s Indian partner in June earlier this year, the model was to be jointly manufactured by Nissan and Suzuki for sale in domestic and export market.
However, it is learnt that the joint manufacturing programme in India has run into rough weather over financial disagreements.
After breaking up with Suzuki today in Tokyo, Nissan said it was in “active discussions” with Renault and M&M to forge a new industrial partnership.
Auto analysts said it made economic sense for Nissan to go with M&M-Renault rather than strike an alliance with Suzuki for the new plant. By joining the M&M-Renault alliance, Nissan will have access to sufficient capacity without heavy financial commitments, they added.