Mahindra looks at Renault to revive sales for Logan

The joint venture saw 50 per cent drop in sales for the model last year

After making several failed attempts to revive the dwindling sales of the Logan sedan, Mahindra and Mahindra is now looking to joint venture partner Renault to take some remedial measure. M&M has already cut sales target for the car.

The loss-making 51:49 JV company, Mahindra Renault Private Limited, posted a whopping Rs 490.21 crore loss during the last financial year, according to M&M’s latest disclosures in its annual report.

Sales of the mid-sized sedan, costing Rs 4.39 lakh (ex-showroom, Mumbai base version), nearly halved to 13,423 units last year — a drop of 48.15 per cent from 25,891 units sold last year. The company has further curtailed its sales target for the car to 500-600 units per month from its earlier forecast of 700 units despite improving external buying conditions, including better availability of vehicle finance and reduced inflation rates.

M&M President (Automotive) Pawan Goenka said: “Looking at market conditions, we have redefined our business plan for the Logan JV with Renault. We are comfortable with monthly sales of 500 to 600 units.”

When asked if the JV was planning more launches, Goenka said, “We can move forward once Renault is clear about what it wants to do. But, as of today, there are no plans to launch more products.”

In June, the company had said that sales of the Logan had stabilised at 700 units a month and that there was no expectation of the demand going higher than this. Due to heavy losses following a worldwide dip in demand for new cars, Renault decided to go slow on all new international projects, including its three ventures in India.

Due to heavy financial losses following a worldwide dip in demand for new cars, Renault decided to go slow on all new international projects, including its three ventures in India.

Soon after the Logan’s launch in April 2007, the French company had planned to roll out various derivatives of the model in the subsequent period. However, there have been no new roll-outs from the Rs 700-core Nashik plant, which is capable of producing 50,000 units per annum.

From monthly peaks of 3,068 units of the Logan reported in March last year, sales of the sedan — which is also the cheapest car in Europe — slumped to a lows of 272 units in December during the same year.

Its downward trend continued despite the company offering discounts at regular intervals, including a whopping cash discount of Rs 60,000. The discount was a combination of a direct cash discount and a 4 per cent reduction in Cenvat rate.