Another hurdle in M&M, Renault joint venture

With depleting sales and mounting losses, Mahindra & Mahindra (M&M) and its French partner Renault are taking a fresh look at their joint venture for cars to decide on the future course for the company. The JV, Mahindra-Renault Pvt Ltd (MRPL), has failed to cut much ice in the market with the first product — the nofrills sedan Logan — failing to take off.

It is believed that the losses and fast-declining numbers have forced the two companies to have a relook at the entire business plan, possibly even at the partnership. While Mahindra has a 51% stake in the JV, the French car major holds the rest. 

When contacted, the two companies admitted that they were discussing future plans for the JV but emphasised that they were committed to the partnership despite the bad run. “… we are currently in discussion with Renault on various product offerings and the way forward for the Mahindra-Renault JV,” a spokesperson for M&M said. Asked if this would include having a relook at the partnership itself, the spokesperson refused to comment. 

Renault also confirmed that the two companies were talking. “Renault’s commitment to the Indian market remains undiluted, and we are continuing to work together with
Mahindra & Mahindra to determine the appropriate product portfolio and the way forward for Mahindra-Renault,” the spokesman for the company’s Indian subsidiary said. 

The JV manufactures the Logan at M&M’s factory at Nasik in Maharashtra and had initially targeted an annual capacity of 50000 units. But the Logan failed to take off in the market, and never reached the targeted number. Currently, it manages to sell only around 500-600 units per month, which means that they are just utilising a little over 10% of the production capacity. 

Senior officials said a part of the talks is to see how to utilise the excess capacity that has fallen vacant due to low production of Logan on poor demand. They would see whether it would be feasible to launch new products immediately, considering Logan has not been a good start.

The JV, Mahindra-Renault Pvt Ltd has failed to make an impact in the market with the first product — the no-frills sedan Logan — failing to impress.

Mounting losses and fastdeclining numbers have forced the two companies to have a relook at business plan, may be partnership. Senior officials said a part of talks is to see how to utilise excess capacity that has fallen vacant due to low production of Logan on poor demand

Source: TOI Epaper