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The JV is dead, long live Logan
French automotive ventures have not worked out well in India.
By : Bijoy Kumar Y | Published : April 19, 2010
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French automotive ventures have not worked out well in India. First it was the lesser known two-wheeler arm of Peugeot who tied up with Chamundi Mopeds to make a moped with self-start and alloy wheels. It failed miserably. Then Peugeot (PSA Group) tied up Premier Automobile to produce the 309 notchback in diesel and petrol variants. The JV bombed despite a product that was spot-on for Indian roads. Now another Indo-French JV bites the dust as Mahindra buys the Renault stake and decide to take the Logan story forward in India. To understand this JV and its fate, you need to start from the Logan.

Dacia, the fully owned subsidiary of Renault in Romania needed an all new car to replace the ageing Renault designs from the 1970s. Research proved that the Eastern Europeans always liked the boxy, straight-lined shapes that emerged from Germany and the rest of Europe in the 1980s and early 1990s. So the Renault designers conceived a low-cost car that was to retail for under Euro 5000 but one that looked robust and trustworthy compared to the aerodynamic beauties churned out by the Japanese and the Koreans – the biggest challenge to Dacia in the then developing economies of Eastern Europe.

 

The car was a big hit and even found buyers in mainstream Europe who liked its no-frill appeal. Mahindra and Mahindra, which was behind the Tata Group by a whole decade when it comes to building a modern day passenger vehicle, decided to seize the opportunity and tie up with Renault to build and sell the Logan in India. Mahindra would get the all important expertise of building monocoque (unitary construction – unlike the body on chassis Jeep-clones and the Scorpio) cars while Renault would gain first hand knowledge of cost-effective supplier base that Mahindra enjoyed in India. A labour-intensive car plant was set up (as against a fully automated one) to cash in on the quality, cost-effective work force available in India.

What worked in the streets of Timisoara and Bucharest didn’t, obviously work in Mumbai and Delhi where prospective car buyers were buying the sleek and contemporary looking models like the Suzuki Swift in large numbers. The irony is that there was a readymade market for a reasonably priced, refined and reliable sedan in diesel and petrol versions as proved by the Swift Dzire that still has a four month waiting list. Alas, Indian buyers found the straight lines and slab-sided profile of the Logan old-fashioned. Mind you, the car was as honest as an automobile could get – it could traverse the Indian terrain with ease, had adequate power and performance, the rear seat had more room that any of its competitors and the ride quality was better than some of its pricier competition.

But instead of communicating all this, an aspiration driven communication strategy was used. Again, what worked for Scorpio so very well did not strike a chord with the sedan buyers. The fact that a whole lot of them were lapped up by a dial-a-taxi firm didn’t do much to the image of the car (in reality this was reaffirming the ability of the product than anything else, still). Soon the numbers started to fall and reached a plateau. The JV could not do any serious price correction too since the engine and gearbox was still being imported to India and formed a critical component of the price tag.

Looking at the positives, Mahindra and Mahindra now has expertise to build a modern day passenger car that is technologically comparable or better than, say what Tata Motors has got in the Indica or Indigo. Actually if you take a second look, Tata Motors has tied-up with Fiat for power-trains after a decade of toying with their own engines and gearbox and Mahindra and Mahindra is in the same situation today with Renault, who would continue to supply engines and transmissions! Now that they have full right to build and modify the platform M&M can flex its engineering capability to come up with a better looking Logan or even variants. The same platform can deliver an estate variant and a cross-over as it stands. It may also spawn a low-cost SUV that is built and drives like a car (like the Skoda Yeti) that Mahindra can sell at a premium price point. As far as export goes, Logan in right-hand-drive format can be exported to South Africa and this can be followed up with other Commonwealth nations later.

In short the future of the Logan and the variants it can give birth to looks bright. As for the loss of Renault as a partner, M&M should not worry too much since it was the Mahindra Logan that the buyers bought than a Renault Logan. Unfortunate but true, the French seem to struggle in India when it comes to the automotive sector.

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  Posted by RetroActiveX at 19th April,2010
The Logan, as much as a competitive car it might have been, it failed primarily because of the way it looked. Downright ugly. Back in those days it was launched, a few of my relatives and friends stayed away from it because of its looks. Coupled with the high price tag, which, understandably was attributed to the high import content. Mahindra needs to understand this and make serious cosmetic changes to the car and price it sensibly.
  Posted by CarLover at 19th April,2010
The other side of this story is, Mahindra was not able to manage it's partners in Car Space. Look at what happened to Ford, they saw all the progress when they broke out of Mahindra alliance and fiesta unlike the Ikon became a success.
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