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Old 4th January 2008, 18:56   #1
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Default M&M may pull out of their JV with Renault-Nissan: CNBC

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M&M may pull out of their JV with Renault-Nissan: Srcs

A in exclusive, sources have told CNBC-TV18 that Mahindra & Mahindra may pull out of the Renault-Nissan and M&M joint plant in Chennai and focus on the Chakan plant for production.

Sources added that Renault-Nissan will now have a 50-50 partnership for the Chennai plant. Renault will, however, continue joint production of Logan at the Nasik plant.

M&M is likely to pull out from the Joint venture between Mahindra-Renault and Nissan that was formed sometime in February last year. Now, this new joint venture will be between Renault and Nissan and it will be a 50-50 joint venture. The three companies had initially committed Rs 4,000 crore fo this joint venture wherein Mahindra was a 50% share holder and the remaining 25% was split between Renault and Nissan. Now it will be a 50-50 between Renault and Nissan and they both will invest about Rs 2000 crore each.

That Mahindra has pulled out of this venture does not mean that Mahindra and Renault products will not be made. The plant that manufactures Logan at Nasik will still continue, in fact, even the Renault cars which will be produced from the Chennai plant will be marketed through MRPL, which is Mahindra Renault Private Ltd. They will be distributed and market through the same joint venture that they had initially. But now Mahindra wont be a part of that three-way joint venture which was formed.

CNBC-TV18 tired to speak with Mahindra and Renault but they both declined to comment on this matter. As mentioned, Logan will still continue and thatís what the plan is currently.


CNBC-TV18 Disclaimer
This information is source-based and has not been provided to the stock exchanges and is source-based.

Moneycontrol India :: News :: M&M may pull out of their JV with Renault-Nissan: Srcs :: Mahindra and Mahindra :: Business :: NULL
---------------------------------------------------------
What this means, if at all it is true:
  • We will not be able to curse Mahindra from now on. It will have no part in any decision making.
  • Logan will continue to be manufactured. Will continue to be marketed by Mahindra Renault Private Ltd.
  • Now Renault-Nissan will decide what all changes they have to do in the Logan and what all models do they have to launch in the future. Mahindra will not have a say in anything.
My request to mods: Please don't merge this thread with the 'Logoff Logan' thread, because this doesn't mean that Logan has been put to death.

Last edited by ashutoshb : 4th January 2008 at 19:02.
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Old 4th January 2008, 19:24   #2
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deja vu PAL Peugeot......the French simply cannot seem to do business here.
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Old 4th January 2008, 19:47   #3
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M&M decided to part ways from the JV, in which it held 50 per cent stake with the remaining shared equally between the other two, as it was unhappy with the French firm Renault and Japan's Nissan firming up multiple partnerships in India for different ventures.

Industry sources, however, said M&M was peeved at the fact that Renault decided to go with Bajaj Auto for a small car project, despite the fact that the partners have an existing joint venture to produce mid sized-sedan Logan in India.

Also, the fact that Nissan had firmed up agreement with Ashok Leyland for three separate joint ventures for light commercial venture manufacturing in India added to M&M's decision not to be a part of the tripartite joint venture anymore.
Article source: M&M pulls out of tripartite JV with Renault, Nissan- Automobiles-Auto-News By Industry-News-The Economic Times
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Old 4th January 2008, 19:53   #4
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It seems like Mahindra didnt want to commit (financially?) to the Chennai plant, keeping in mind the several companies that Renault is trying up with. But the article insists that the marketing will still be through the Mahindra-Renault joint venture. However, it doesnt mention if the Logan will be produced exclusively at the Nasik plant only?

I think this is only an indication of times to come. Eventually, Renault will drive on the Indian roads alone. Anyone remember Mahindra-Ford? M&M was not too much more than a local tour guide for them.

Last edited by GTO : 4th January 2008 at 19:55.
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Old 4th January 2008, 20:13   #5
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Anyone remember Mahindra-Ford? M&M was not too much more than a local tour guide for them.
Again, M&M didnt want to commit financially to the Chennai plant back then.
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Old 4th January 2008, 20:32   #6
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This will look like VW in China. You see two VW showrooms couple of doors from each other

Shanghai Volkswagen - Santana, Passat, Polo
FAW - VW - Jetta's (jetta2's) Sagitar (new Jetta), Bora (jetta 3), golfs and audi's

So we will get confused with Mahindra Renault, Leyland Renault, Bajaj Renault

When I worked with Eicher, things broke down with VW since they wanted majority control for a 30% stake - VW got rather peeved and ran far far away. So much so, during a management meet, someone did a spoof video on eicher demanding control over Exxon after taking a 3% stake
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Old 4th January 2008, 23:44   #7
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Originally Posted by Steeroid View Post
deja vu PAL Peugeot......the French simply cannot seem to do business here.
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Originally Posted by GTO View Post
I think this is only an indication of times to come. Eventually, Renault will drive on the Indian roads alone. Anyone remember Mahindra-Ford? M&M was not too much more than a local tour guide for them.
It really does look like history repeating itself. But we would hav to wait and watch whether another French player can hold itself firmly or bite the dust?


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.
.
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...CNBC-TV18 tired to speak with Mahindra and Renault but they both declined to comment on this matter. As mentioned, Logan will still continue and thatís what the plan is currently.


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pls dont ban me again for going but it seems even the media is tired off the Mahindra-Renault venture. it is high time Renault does something to save its bread-and-butter-all-over-the-globe car to gain some ground in the Indian market.
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Old 5th January 2008, 02:17   #8
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Don't think it is Renault who has thrown Mahindra out. It is Mahindra, who has opted out of the JV. ET guesses it right by saying that upset by various JVs setup by Renault.. Mahindra felt cheated and sought to leave the deal in between.
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Old 5th January 2008, 07:24   #9
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Renault-Nissan basically threw out MM by signing up with various other parties. If they wanted MM badly they would not have been so insensitive to MM interests.

Either MM remains a lala company making overpriced shoddy products and dependent on such alliances (which are primarily as 'tour guide' as someone put it) or it grows on its own and becomes a auto giant. Its ambition to takeover Jaguar suggests it seeks the second course. So it should be happy to leave too..
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Old 5th January 2008, 07:54   #10
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YOu also need to look at it from Renault's perspective. M&M priced the Logan badly and have shown no marketing flair. An extract from todays www.ft.com shows that they are dependent on the Logan due to a downturn in european sales.

I am a subscriber of ft.com so can only display an extract and not th whole link

Quote:
Renault’s budget Logan car, which retails at €5,800 to €7,600 ($8,566-$11,225), was the company’s most popular model, selling more than 360,000 units. About 15 per cent of all vehicles sold by the Renault group are Logans, which are available as saloons, vans, people carriers and – starting this year – pick-up trucks.

In Latin America, Asia and Russia, the Logan is sold under the Renault brand. In Europe and North Africa, the Logan is sold under the Dacia brand, the name of Romania’s former national car producer in the Soviet era, which Renault bought in 1999.

The Renault group’s fastest-growing region was eastern Europe, with sales in Russia, Romania and Ukraine all rising more than a third. Russia, Romania and South Korea – where Renault took over Samsung’s car manufacturing operations – are the only countries outside western Europe in which Renault sells more than 100,000 cars a year.
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Old 5th January 2008, 12:54   #11
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YOu also need to look at it from Renault's perspective. M&M priced the Logan badly and have shown no marketing flair.
You bet they botched up the pricing of the "cheap sedan". And I think it was more of overconfidence, rather than higher-than-expected costs. M&M does know a thing or two of saving up the moolah.
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Old 5th January 2008, 13:23   #12
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This was bound to happen as the marriage was more of a convenience as M&M did not have a sedan in their stable. M&M would have known earlier itself that Renault was in touch with other indian cos to form JVs. Better late than never. Wonder Ford might be laughing right now after this deal broke out. The other marriages like TKM, MarutiSuzuki have worked out well. But this is the second time M&M has come out of JV.
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Old 5th January 2008, 13:52   #13
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Mahindra's press release:

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" There have been several media reports on Mahindra pulling out of the tripartite manufacturing plant to be set up in Chennai. We would not like to comment on these speculative reports."

"However, we would like to make a clarification with respect to a specific comment made in some media reports about Mahindra being unhappy with the multiple alliances of Renault and Nissan in India. On this point we would like to reiterate, as we have done in the past, that M&M has no objections to Renault and Nissan having multiple alliances as long as they do not conflict with the existing Mahindra Renault JV. Moreover, multiple alliances are a normal practice in the auto industry and M&M itself has multiple alliances in India."

"We would also like to reiterate that M&M has a very strong and healthy relationship with Renault and both partners are proud of the success of the Logan and the recognition and accolades the product has received which is a result of the co-operation between the two partners,"
info source: MACHINIST - Pawan Goenka issues statement regarding M&M pulling out of JV
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Old 5th January 2008, 14:24   #14
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Typical corporate press release that takes 5 paragraphs to say nothing.
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Old 5th January 2008, 19:02   #15
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These marriages dont work for a simple reason - US/European companies intially think India is like Thailand/China/Japan where local language/culture etc issues make it compulsory to have local partner. When they come here they discover that other than to navigate the bureaucracy and know which politician or babu to bribe, they dont need lalas. And they can hire Indian talent to run the show themselves.

In case of Logan, the only thing MM is supposed to bring to table is local market intelligence. Renault know show to make it and make it cheap. The pricing and product positioning showed they got that wrong.
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