With Logan, Mahindra readies for urban road-test

MUMBAI: Less than a week before the launch of its first passenger car, auto major Mahindra & Mahindra and its dealers are giving finishing touches to something they haven’t done for a long time - urban car retailing.

The Rs 13,850 crore manufacturer derives a chunk of its revenues from rural and semi-urban centres.

Yes, its only offering for the city slickers, the Scorpio sports utility vehicle, has made huge inroads into what was once the preserve of Tata and Toyota. The Scorpio continues to sharply sting both brands, five years into launch.

All other Mahindra offerings such as tractors, the Bolero and the Maxx range of utility vehicles cater mainly to the semi-urban and rural populace.

So much so, even the company’s finance arm - Mahindra Finance — has a clear mandate: focus on Bharat.

Rajesh Jejurikar, managing director, Mahindra Renault, 51:49 joint venture with Renault SA of France, doesn’t foresee an issue there.

“It (urban India) was new to us five years back when we launched the Scorpio. Now it sells more than some passenger cars in the country. So I don’t think it would be a challenge for us to sell cars to the urban Indian.”

An auto analyst said while that may well be true, but when it comes to cars, the battleground alters significantly - there is far greater competition than in SUVs.
A brand consultant said in autos, success is not an urban or rural mindset thing.

“It’s the consumer mindset, and I think the Mahindras have that. And if they have done well in rural India, there is a greater probability of them doing well in an urban scenario,” he said.

Ashutosh Goel, an analyst at Edelweiss Securities, told Reuters on its own, Renault could have struggled to get its brand known. “But with the Mahindra co-branding, it’s taken care of.” 

More than a decade ago, M&M had signed up a joint venture with Ford Motor Company to manufacture the Ford Escort. M&M’s investment was later capped as the venture was losing money and the gestation period extended.

Ford shovelled cash to sustain the business, and bought back a chunk of M&M’s stake in the venture.

M&M, meanwhile, decided to focus on utility vehicles and tractors where it remains the leader - till Renault drove in with what the emerging markets were looking for — an inexpensive, very roomy yet good-looking family sedan.

M&M is revamping its auto distribution network for the Logan. The company’s city-based dealers have been given a choice - sell M&M’s utility vehicles or the Scorpios and Logans.

While the former outlets would be Mahindra-branded, the latter would have a strong Renault influence.

The French auto giant’s trademark yellow colour will streak large across showrooms, said Ashok Bhavsar, director, Bhavsar Motors, a spanking new Mahindra Renault outlet in Prabhadevi, central Mumbai.

Down the road, Bhavsar and other Logan dealers would also get to sell M&M's Ingenio range, which is currently a work in progress.

Of the five Logan showrooms opened in Mumbai (another two will open in three months), three are former M&M dealers. "We will launch the Logan through 120 showrooms, of which about 11 are new," Jejurikar said.

The company is keeping the details under wraps till the last minute - perhaps taking cue from the tantalising Nissan Infiniti campaign of many years ago.

Ashok Bhavsar said he hasn't been given a product brochure yet, though he has seen the Logan at the Mahindra-Renault Nashik plant. “The cars and the brochures would be delivered to us only next Tuesday," he said.

That's when Carlos Ghosn, the legendary chief executive of Renault and Nissan Motors will take the wraps off three Logans: the 1.4 litre petrol, the 1.5 litre diesel, and 1.6 litre petrol variants.

With market penetration the primary objective, bets are that the base Logan model will carry an aggressive price-tag - of under Rs 5 lakh. Expect segment leaders Tata Motors and Maruti to react to that.