M&M to pay more to Renault to reform Logan platform



India’s largest sports utility vehicle maker Mahindra & Mahindra (M&M) will hold negotiations with former joint venture (JV) partner Renault for reforming the Logan platform and making it usable for applications other than passenger cars.

Mahindra had bought Renault’s 49 per cent stake in the troubled Mahindra Renault Private Ltd (MRPL), while gaining limited autonomy to the Logan sedan, in an effort to turn around the loss-making company.

Executives of M&M agreed that besides incurring developmental costs for making engineering changes to the Logan car or its platform, it will also have to make additional payments to Renault, as the French company holds the original right for the car.

A senior M&M executive stated, “To develop the Logan platform we will have to negotiate further with Renault, as this will cost more money to be paid to them. We will first have to get a go-ahead from them before we make any changes to the car”.

Renault, meanwhile, has said it is open to extending all technological or design support needed by M&M for the Logan sedan. M&M is at present conducting a feasibility check on whether a shortened version of the sedan could be launched.

M&M will also have to think about a new name for the car as the Renault branding and the Logan name will have to be discontinued post December 31 this year, as part of the rearrangement of the joint venture agreement between the two companies.

“We will lend our brand name only till the end of the year, as from January 1, 2011 it will be M&M’s responsibility of rebranding the car. We have signed a technical licence agreement and have not sold the platform to M&M, which restricts them to make any free changes,” said a Renault India official.

After the takeover of Renault’s stake, M&M had slashed the price of the Logan by as much as Rs 80,000 in an attempt to regenerate interest among vehicle buyers in the under-performing sedan.

Sales of the Logan showed an improved trend, month on month in May, with sales touching 450 units compared to 303 units sold in April this year. The price cut was brought in force in the final week of April, a little more than a week after M&M bought Renault’s equity in the JV.

M&M has ruled out the option of developing a new car on the Logan platform for the time being, with the official stating the company has no ambitions for the passenger car segment and that the platform could be rather used for other purposes.

“We have several options in front of us, such as a utility vehicle, multi-purpose vehicle, SUV and cross-over, since we have the expertise in that segment with the Scorpio, Bolero and Xylo,” added the M&M official. The medium-term target for M&M is to scale up the sales of the Logan to 900-1,000 units per month, which the company hopes to achieve by December. A Logan less than four metres would attract less taxes, thus making it cheaper than the current one.

Meanwhile, Renault is preparing to have its first standalone car on the road by mid-2011, with the introduction of the Koleos (an SUV) and Fluence (a premium mid-segment sedan). Both will be made at the facility in Chennai, which it shares with partner Nissan.

The company plans to have five models on Indian roads by 2013, including a small car based on the platform on which the Nissan Micra is built. The MPV Kangoo, which will compete against Maruti’s Eeco and Tata’s Venture, will also be subsequently launched.