The Hindu Business Line : M&M, Renault ink pact to produce Logan cars

FRENCH automobile major Renault hopes to increase its annual worldwide sales from 2.5 million cars to 4 million cars by 2010, according to the company Chairman, Mr Louis Schweitzer.

Key to this scaling up is the Logan model, a right-hand drive version, which would be manufactured in India by the proposed 51:49 joint venture between Mahindra & Mahindra Ltd (M&M) and Renault. Mr Schweitzer and Mr Keshub Mahindra, Chairman, M&M, signed the formal agreement in this regard on Monday. The joint venture will cost 125 million euros (Rs 720 crore).

"Yes, this is a partnership. To succeed in India, it is good to have a partnership," Mr Schweitzer said. The Indian plant, due to roll out the Logan in 2007, would have capacity to produce 50,000 cars. "This is a pragmatic approach," he said of the modest capacity. Local content at start would be 50 per cent.

The Renault Chairman pitched the Logan — at present produced in Romania and due for production in Russia, Morocco, Columbia and Iran — as the first modern, reliable and affordable car in its class. "There have been many pretenders for the title of world car. At its price, I believe the Logan is the best value for money car in the world," he said.

Recent news reports have quoted Mr Schweitzer as saying that up to one million Logans could be sold annually by 2010.

The Logan project was founded on such goals as steep price reduction (as much as 30 per cent being original target), no compromise on reliability, lesser number of components for easy maintenance and sturdy build. Further, given work in Iran for using natural gas as fuel, the Logan should soon have a natural gas version as well, he said.

Mr Schweitzer couched Renault's India interest in the certainty of the country being a future industrial power and a populous market. There will be a Renault Technical Centre in India to support the joint venture with M&M.

On China, where global majors have installed huge car-making capacities, Mr Schweitzer said Renault would proceed carefully. "We are still talking," he said of the proposal for a car manufacturing deal with Dongfeng Motor, China's fourth biggest vehicle producer.

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