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Renault has pulled out of a joint venture with Indian car manufacturer Mahindra and Mahindra, which produced its first car for the growing South Asian market, the Logan, writes Salil Panchal.
The Logan was launched in 2007 by the joint venture - 51-per cent owned by Mahindra - but its sales have struggled amid criticism by some car experts of its boxy, dated design and fierce competition.
"The parties have, in principle, agreed that M and M will take over the operations of the company," the companies said in a joint statement, which did not say how much Renault had sold the stake for.
Analysts say that Renault is keen to establish an independent presence in India, having already announced it will launch the Micra small car in July with Japanese partner Nissan. The Renault-Nissan car-making alliance has also confirmed plans for another small car in the future with another local partner - motorcycle and scooter manufacturer Bajaj Auto.
Earlier this year, Renault's chairman Carlos Ghosn said that he was discussing the future of the relationship with Mahindra in an open way, where "both parties can find their own interests".
The Logan, a mid-sized car priced at 450,000-570,000 rupees (around BD4,000), has seen a gradual dip in sales in the past two years, hit by growing competition and higher prices, due to taxes. Logan sales have dipped from a peak of around 2,000 per month in 2008 to around 350 in March this year amid competition from rivals Tata Motors, Hyundai and Ford Motors, analysts say.
"The Logan will now be re-engineered and re-designed as a Mahindra product, starting in the next two to three months," Pawan Goenka, president of Mahindra and Mahindra said.
Rajesh Jejurikar, chief of car operations at Mahindra, said the group sees the change as an "opportunity to strengthen our presence in the car segment."
Renault and Mahindra said they have sold 44,000 Logans in India and exported 2,600 units to South Africa and Nepal since 2007. As part of the agreement, the French company will continue to supply key parts of the Logan, including the engine and transmission, the companies said.
The Logan will be sold exclusively as a Mahindra car by the end of the year.
