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| Edited By: Neha Rishi |Source: DNA |Updated: Mar 17, 2018, 02:55 AM IST
Mahindra and Mahindra (M&M) and French carmaker Renault are in talks to restructure their 51:49 joint venture — Mahindra Renault Pvt Ltd — which manufactures the Logan sedan in India, Marc Nassif, managing director, Renault India said on Tuesday.
A decision is likely in 30-45 days, he said. Nassif did not elaborate on the options being discussed. Sources, however, said the companies are primarily looking at three options:
1. Renault buying out Mahindra’s 51% stake in the JV;
2. Mahindra buying out Renault’s 49% stake, taking over the plant and allowing Renault to sell Logan in India; and
3. Renault having majority stake, with Mahindra holding the rest, and Logan and its variants being contract-manufactured out of Nashik.
Irrespective of which option the companies choose, Logan will continue to sell through the 110 dealerships of Mahindra Renault, sources said.
Speculations have long been rife that Renault is irked with the declining sales of Logan and plans to go it alone in India.
Sales of the sedan have declined after a favourable start in 2008.
A key issue has been pricing — at more than 4 metres in length, the sedan incurs a factory gate duty of 20%, making it expensive for the target segment.
For Renault, which is keen to grow in India, this is far from pleasant. Unlike its global partner Nissan, which has outsourced its marketing and distribution activities, Renault is looking to set up its own distribution setup in the country.
Nassif said it plans to set up around 10-15 dealerships based on the franchise model by mid-2011, and will raise this count to 150-200 dealers across 40 cities in 3-4 years.
The company will also add five products to its portfolio in the next four years. Two of these products —- Fluence (sedan version of the Megane) and compact SUV Koleos —- will hit the market by 2011, followed by a hatchback in the B segment.
The R&D centre in Chennai will also work on Renault’s
high-selling models such as Clio (B+ segment hatchback), Kangoo (MPV) and Megane (small hatch), a source said, pointing out that the cars would need a lot of re-engineering to suit Indian conditions and market.
“Our range will have small-to-luxury cars and will be a mix of Renault models and some based on platforms shared within Renault-Nissan alliance,” Nassif said.
He, however, did not say whether Renault’s small car, which will be made on the same assembly line as Nissan’s, will be built on the V platform of Nissan as well.
Renault, which had in 2008 frozen investments in India owing to the global recession, announced on the sidelines of the Auto Expo in Delhi that it has resumed investments. This means the second line in the Chennai facility, which was put on hold by the company, will finally be built.
“The company aims to sell 15 lakh vehicles by 2015 and 5 million vehicles by 2020, capturing a 10% market share. The moment there is traction in volumes out of the Chennai facility, it will go ahead with constructing the Renault line (second line), which will be used by both Renault and Nissan. The second line may even be set up within two years’ time,” the source said.
Besides Rs 650 crore it has spent on the Chennai facility (out of the total capex of Rs 4,500 crore over a period of seven years), the company will have to spend an additional Rs 1,280-1,600 crore in building the second line. Currently, line one can produce around 2 lakh units and the plant’s production capacity is 4 lakh units annually.
The company will also have to spend a substantial sum on marketing and distribution activities. It costs Rs 4-5 crore to set up one dealership. This would mean an additional investment of Rs 450-750 crore.
The company will also consider setting up an engine and transmission facility in the Chennai plant after 2011.
