Renault to continue with M&M for Logan, says Ghosn

Renault has no intentions of upsetting the applecart with Mahindra & Mahindra on the Logan project.

“The Logan will continue to be developed with M&M,” Carlos Ghosn, Chairman and Chief Executive Officer of Renault-Nissan, told Business Line during his recent India visit.

However, it is still not clear if there will be any change in the retail strategy for the car. At present, it is showcased with M&M’s Scorpio sport-utility vehicle in the company’s showrooms. Renault is clear, though, that it is working on an independent retail strategy for its future India products and it remains to be seen if the Logan will be part of this revised plan.

“The only thing that has to be clarified for Renault is how to market and sell our products. This is not an issue with our partner, Nissan because its retail plan is in place. Renault is working on something and is clear about an exclusive identity in the form of showrooms, advertising campaigns and so on,” Ghosn said.

M&M and Renault entered into a 51:49 partnership three years ago to manufacture the Logan sedan. The car promised plenty but monthly sales have been at the sub-500 unit level for sometime now and losses last fiscal totalled nearly Rs 500 crore. The Nashik plant has been planned with an installed capacity of 50,000 cars annually.

M&M believes that the way forward is to reduce the length of the Logan to four metres so that it qualifies as a small car in the Indian context and can avail of the lower eight per cent excise duty (instead of the current level of 20 per cent). This is applicable to any car up to four metres long whose engine capacities do not exceed 1.2 litres for petrol and 1.5 litres in the case of diesel.

“The excise duty is an issue in India but we need to continue to work on the Logan to adapt it to local tastes. We also need to do it quickly and with a good knowledge of what customers want,” Ghosn said.

According to him, the other solution lay in localisation of components which would play a key role in bringing down costs. It now remains to be seen which of these options would be exercised though he was categorical that both parties would work jointly on finding an answer.

“We need to do it with M&M as they have shared responsibility on the car and also possess knowledge of the Indian market. We need to decide the solution together,” Mr Ghosn said.

It now looks as if the partners are working overtime to get it right. “Hopefully, before the Delhi Auto Show kick of in January next year, you could see many things becoming clear in these small, grey areas,” he added. It will be interesting to see if some of these initiatives include a new product line-up for the Nashik plant.

Trimming the Logan will help reduce its price tag by at least Rs 50,000 but dealers are not entirely certain if that alone would suffice especially when substantial discounts are already being offered on the car to keep it moving off the shelves.

Ghosn said that the Indian customer is “value-driven and wants everything in his car” which seems to indicate that Renault may even work on some internal aspects of the Logan in terms of offering more goodies at the same price, or even lower if its length is also reduced. The car, he added, has been a huge success in Russia, Europe, North Africa and Brazil.

“We are surprised that it could not be replicated in India. The Logan is important for Renault’s future because it is the first product from us in this country,” Ghosn said.

Taken from Business Line