The Hindu Business Line : Renault weighs Logan hatchback option for Nashik

Mumbai, Dec. 22 French automaker, Renault, is exploring the option of producing the Logan hatchback at Nashik, which is already home to the sedan version.

According to component suppliers associated with the project, this move could go a long way in optimising capacity at the plant, especially with Logan sales having fallen sharply in recent months. The plant has an installed capacity of 50,000 units annually but barely one-thirds has been used so far.

The Sandero hatchback (codenamed B90) was earmarked for the new Chennai facility being commissioned jointly by Renault and Nissan in end-2010. However, sources say that with the present economic downturn, it just makes sense to use an existing plant that has spare capacity to offer.

In addition to the hatchback, Renault also had on its Chennai agenda the Logan Steppe station wagon (R90) and the crossover sport-utility vehicle (H79). “At this stage, the hatchback is ideal because it has the potential to generate good volumes. We have no idea, though, what timeframe Renault has in mind,” component makers, who did not want to be identified, told Business Line.

Retailing

The Nashik unit is under the umbrella of Mahindra-Renault. This joint venture, in which Mahindra & Mahindra has a 51 per cent stake, was created only for producing the Logan sedan.

Other derivatives of the Logan as well as Nissan’s own sub-compact products (codenamed X02A and XO2B) were scheduled to roll out of Chennai. However, the Renault range, inclusive of the Megane at a later date, will be retailed through the Mahindra-Renault channel, which caters to the Scorpio and Logan.

Company sources reiterated that “no final decision had been taken yet on any additional models or variants at Nashik.”

The Sandero hatchback is the best bet in a market where small cars rule the roost though it will not come in cheap. Renault will have to pull out all stops to keep costs in check which means a sharp focus on localisation of parts.

Lacklustre market

Dealers at Mahindra-Renault would also welcome the hatchback because the Logan sedan has done precious little to boost their business. As experts say, from their point of view, it makes sense to have a range of products in a lacklustre market. For the moment, the Scorpio is the only other option though the Xylo multipurpose vehicle will join the Mahindra-Renault retail channel in the next three weeks.

Assuming Renault does decide to produce the hatchback at Nashik, it will be interesting to see if this ends up merely becoming an interim arrangement till the Chennai plant is commissioned. “By the end of the day, this will become a contract manufacturing arrangement with Mahindra-Renault since Chennai is a different joint venture,” sources said.

M&M was part of the other alliance too but decided to drop out leaving Renault and Nissan to take things forward. Barely a fortnight ago, the partners made public their intent to go slow with only one assembly line instead of the originally planned two. Should the slowdown continue, even this schedule could be affected, sources say.

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