Renault and Mahindra Joint Venture Deal

French car maker Renault and Mahindra group have signed a joint venture agreement to build and sell Renault's entry-level midsize Logan car in India as of 2007. The Logan will be marketed under the brand of Mahindra Renault. Mahindra will hold a 51 per cent stake in the car venture while Renault will hold 49 per cent, they said in a joint statement. Mahindra will use its extensive dealer network to distribute the car in the country. A right-hand version of Logan will also be developed by Renault in partnership with Mahindras to meet the needs of India and other right-hand drive markets.

The estimated cost of the project is $165 million with an initial aim of producing 50,000 cars per year, the partners said. The budget Logan car was developed by Romanian car maker Dacia and its parent company Renault. Renault says the Logan has been designed for markets with limited consumer purchasing power and where customers are seeking cars without the accessories sought by buyers in western Europe.

Renault wants to take advantage of India's growth potential. The Logan project is a key part of Renault’s outgoing chairman and CEO Louis Schweitzer's ambitious plan to up the group's sales past the 4m mark by 2010. The group’s main brands include the Dacia and Korean manufacturer Samsung. It excludes Nissan in which Renault owns a 44% stake. Mr Schweitzer believes that this goal is possible only with the vigorous expansion in new and emerging markets, accounting for 80% of the growth in the car business.
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