Mahindra and Mahindra and Renault Joint Venture Restructured

Renault is departing from the not-so-successful joint venture with India’s Mahindra & Mahindra after low sales of Logan, and is expected to concentrate on other projects in the Indian market.

The two companies have announced that Mahindra & Mahindra will buy out 49 per cent of the joint venture stakes held by Renault. The joint venture sells entry-level sedan, Logan, in India

Mahindra & Mahindra, through a five-year license agreement, will continue to get technological support and other key components including engine and transmission from Renault. Under the agreement, Mahindra gets total ownership of Logan, but with limited engineering rights to refresh the product.

Pawan Goenka, Mahindra’s automotive sector president said the two partners had invested 7.5 billion rupees in the joint venture.

“We are looking forward to turning this product around,” Goenka told reporters. “We mutually agreed that the Logan will be more successful if it was completely under Mahindra & Mahindra.”

Goenka added: “Our becoming a solo player in the passenger car segment does not change our basic strategy of being a core player in SUV.”

The joint venture was established in 2005 with India’s largest utility vehicle & tractor manufacturer, Mahindra, holding 51 per cent stakes.

Logan, initially, got a good response from the Indian customers, but eventually, succumbed to the more sophisticated looking competitors.