Renault can break ties with any partner, including M&M ( Mahindra )

[aaggoswami]

I came across this news. Its pretty bad that Renault is going this way round. I wonder what is up in their plans. How will they survive without local network of dealers and service centers ?

Next, is it french or M&M that is behind this problem. M&M broke up with Ford, but IMHO, it was not due to conflicts.
What about existing Logan owners ? Forget that, the brand Renault is losing confidence in a strong economy. They should learn from Peugeot or for that matter even from Fiat.

About declining sales, I think Renault thought that we are Third World, and they are the most ultimate humans that produce the best cars in the world. Placed the Logan badly in Indian market with relatively dull powertrains, so what they expected ? That Indians will lap up the Logan in that format ?

IMHO, there is something wrong with Renault. Specially the attitude they carry around is responsible for low sales and not M & M.

Source : Renault can break ties with any partner, including M&M

Article :

Hinting the biggest drop that all is not well in its partnership with Mahindra & Mahindra (M&M), French auto major Renault said if things did not work out, it can break ties and may even drive in its new product in India with a different partner, reports Business Standard.

Renault, which has a joint venture with M&M that sells entry level sedan Logan, has been a subject of speculation over its relationship with the Indian partner and declining sales of the car had put a question mark over the future of the JV, Mahindra Renault, in which the French firm has 49% stake.

Renault has other alliances with Bajaj Auto for a small car project and Ashok Leyland through Nissan for light commercial vehicles in India.

Shares of Mahindra & Mahindra gained Rs 4.05, or 0.45%, to trade at Rs 912.00. The total volume of shares traded was 32,301.00 at the BSE (10.53 a.m., Wednesday).

@ mods : Could not find thread with this topic of Renault daring to break tie up with M&M.

[finneyp]

With the dwindling sales of Logan, Renault M&M break-up is imminent!

[TeddyBear]

We could smell out when Mahindra pulled out of the "Nissan-Renault-Mahindra" Small car plant in Chennai. During the pullout Mahindra was fuming that too much burdens were unreasonably dumped to Mahindra in the joint venture.

Now Renault is trying to blame the Mahindra for not selling the low cost Dacia. I would suggest mahindra to venture into contract production for other European companies for export and get the license to sell them in India.

[Avenger]

quoted from economictimes.com

“We have today three partners (in India). Our intention is to continue with the (three) partners, but if it is not possible, I can tell you that we need at least one,” he added.

ET had in its October 6 edition reported about the simmering differences between the French car major and its Indian partner M&M, which centre around Logan’s poor performance in the Indian market.


The low-cost car, a winner across the world, has seen its sales crash 71% in September to just over 500 vehicles, while its April to September numbers are down to less than a third of last year.

“It is a matter of concern. Every time your sales go down on any model, not only in India, we always check why. We are going to try for some more time, if it does not work then we will go with a second car, probably with a different partner. We are in India to stay,” Mr Ghosn said.

He said the failure of Logan was because “it is more expensive than we hoped it would be in India. The market here is extremely sensitive to the price. Another reason is, we don’t have enough localisation in India”.

Mr Ghosn stressed on the importance of working with local partners in India to benefit from their knowledge and capabilities. “At this stage there is no decision, nor any plan to cease co-ordination with any of its current partners,” he added

[aaggoswami]

Here again I think that European manufacturer, Renault, is at fault.

1) They bring in a car that is specially made for Third world. Neither interior nor exterior is modern in design as compared to others.

2) Rather than bringing in hatch version of Logan called Sandero, they are busy playnig blame game.

3) Renault Nissan JV have some pretty good engines, but they are not bringing those here. The weak powertrains were no match for competitor. Add to that an un-exciting design. What we have is a car that cannot be called successful.

4) The expectations from Mahidra was too much I think. What Renault thought was this : Dump one car that is three box, place it high and Mahindra must manage high sales and profit. The biggest

The biggest problem was a wrong product.
Both Nissan and Renault are very small player in Indian market.

[gshanky]

This is bound to happen anyways because logan sales are dropping very low. What Renault should understand is that, the competition has waken up and are offering better alternatives in the price point in which Logan is selling. They can either reduce the price or re-design/refresh the current model(s).

And again, Mahindra is also getting less interested in the car/Sedan segment. Their focus is on MUV/SUVs and rightly so. Of course Renault will think if Bolero, Xylo and Scorpio have segment leading sales numbers whereas Logan is almost at the bottom in it's segment

It takes two to tango and IMO Mahindra should also re-think the strategy and see how they could contribute to and leverage this partnership so that they could consider using the partnership outside india like tata and fiat.

[Trapezio]

Originally Posted by aaggoswami

1) They bring in a car that is specially made for Third world. Neither interior nor exterior is modern in design as compared to others.

2) Rather than bringing in hatch version of Logan called Sandero, they are busy playnig blame game.

3) Renault Nissan JV have some pretty good engines, but they are not bringing those here. The weak powertrains were no match for competitor. Add to that an un-exciting design. What we have is a car that cannot be called successful.

4) The expectations from Mahidra was too much I think. What Renault thought was this : Dump one car that is three box, place it high and Mahindra must manage high sales and profit. The biggest

The biggest problem was a wrong product.
Both Nissan and Renault are very small player in Indian market.

I don't think Renault will withdraw from the market. All they have said is that they might not continue with the alliance with Mahindra.

All this issues with Logan being uninspiring, third-world car, dull, boring etc does not hold true. This car with the same engines were released in the final production trim before Renault- Mahindra JV was announced. I cannot believe that an innocent Mahindra entered into this JV without knowing the product they were going to introduce. So Mahindra very well knew what they were getting. In fact they should be grateful that they got the option of Sandero, because that was not finalized at that point.

From the pricing point of view it was not that high. It simply never clicked. Also there are a lot of people who are not used to buying cars from Mahindra. I know that Mahindra will argue the other way but that is simply the reality.

I think what Renault expected from Mahindra was a marketing partner. Somehow (it might not be Mahindra's mistake) it never happened.Perhaps both should sit down and decide how to continue. If its better to split; so be it and save the Renault brand. Otherwise the end looser will be Renault and not Mahindra.

Note: Funny, when the Logan was launched it was Renault Mahindra Logan because Mahindra had contributed heavily to 'adapt' the car for India. Not its simple Renault Logan.

[Sush]

If there JV breaks, how will it affect the Logan owners?

[ashutoshb]

As long as Renault supports the existing owners, I do not see a problem. I see what Ghosn is indicating.. they can leave Mahindra and Bajaj.. but they can't leave Nissan. And Nissan does have big plans for India. In an article, they were talking about increasing their dealerships to 55 by 2012 (http://www.team-bhp.com/forum/indian...ia-2012-a.html (Nissan plans to drive in nine models to India by 2012)). So maybe we are are seeing Renault-Nissan on their own in the future. And you come to think of it, most of the international players dumped their Indian partners and stood on their own.. sooner or later.

[anmol2k4]

Originally Posted by ashutoshb

As long as Renault supports the existing owners, I do not see a problem. I see what Ghosn is indicating.. they can leave Mahindra and Bajaj.. but they can't leave Nissan. And Nissan does have big plans for India. In an article, they were talking about increasing their dealerships to 55 by 2012 (http://www.team-bhp.com/forum/indian...ia-2012-a.html (Nissan plans to drive in nine models to India by 2012)). So maybe we are are seeing Renault-Nissan on their own in the future. And you come to think of it, most of the international players dumped their Indian partners and stood on their own.. sooner or later.

Renault is holding 44.3% of Nissan shares and Carlos Ghosn is CEO of Nissan, so i don't see how they can leave each other when they basically are invested into each other.

Nissan's strategy is spearheaded by Ghosn himself, so if he had big plans for Nissan in India then why did he get into partnership with Bajaj, Mahindra and Asho Leyland ?

Why would these three big business families(Mahindra-Bajaj-Hindujas) would want themselves to be restricted to certain segments in Automotive Sector because of their partnership with Renualt ?

I think Ghosn wasted some precious time of Mahindras, Bajaj and Hindujas i am sure they would be mighty p1ssed about this.

I think Renault-Nissan would have hard time finding other partners in India after this fiasco.

[pgsagar]

With those ugly looks that Logan has, this was expected sooner than later. This is the second time French will be packing their bags. To me Logan looked shockingly ugly from day one.

Renault should learn a thing or two from Fiat. The Italian giant also almost sank in India but came back from the brink, thanks to Linea. I do not know about other states but people of AP seem to have taken a big liking to Linea and I see lots and lots of them on road here.

[aaggoswami]

Originally Posted by Trapezio

1) All this issues with Logan being uninspiring, third-world car, dull, boring etc does not hold true.
So Mahindra very well knew what they were getting. In fact they should be grateful that they got the option of Sandero, because that was not finalized at that point.

2) From the pricing point of view it was not that high. It simply never clicked. Also there are a lot of people who are not used to buying cars from Mahindra. I know that Mahindra will argue the other way but that is simply the reality.

1) Believe it or not, Logan's looks, design and powertrains are the main reason for failure. Any given day, these parameters were weak as compared to competitors. Indigo and then Dzire were looking better, were proven and overall the design + powertrains offered were better.
Mahindra has an option of Sandero, but Sandero is still not in India. The platform is the same, then it should have been in here by now with 1.5 diesel.
IIRC, Sandero production started in 2007, a time when the market was not very crowded. Sandero could have proved itself even if it was brought by end 2008.

2) Why did renault not think of this before ?
After all Ghosn is a proven man, then why this scenario ? IMO, the recent good products have hit Renault hard. Here again the product has to be better. Renault never took Tata and Maruti seriously in Indian market. They thought that India is a third world, so they need Logan and nothing else, but Tata, Maruti and even Hyundai have taken the game far ahead in India than what Renault can imagine.

Mahindra must leave this partnership and focus on SUV. They have Scorpio and Xylo that are doing very good as SUV and MUV respectively. Bolero already is in record books. Mahindra must spend energy and resources here rather then ending up in JV with somebody who does not understand what Indian market is.

Renault clearly has not given Mahindra good products. Still Renault is trying to prove that its ego is bigger than any other parameter.Renault is busy fighting rather than discussing + bringing in better products.

Originally Posted by ashutoshb

As long as Renault supports the existing owners, I do not see a problem. I see what Ghosn is indicating.. they can leave Mahindra and Bajaj.. but they can't leave Nissan. And Nissan does have big plans for India.

3) They are losing on brand image. Brand image can make or break products. What Renault is losing is Indian buyers confidence, and the long term consequences are not good. We have seen this in case of Fiat. Peugeot is still not in Indian market.

4) Nissan is serious and it has new car on cards ( we have a thread on that ). Nissan has taken steps after Logan failure. They are coming up with a new small car plus they recently came up with Tenna and Xtra, but for the small car to succeed, they will need a wider network.

[ashutoshb]

Originally Posted by anmol2k4

Renault is holding 44.3% of Nissan shares and Carlos Ghosn is CEO of Nissan, so i don't see how they can leave each other when they basically are invested into each other.

my point exactly.. they can't leave Nissan.

Originally Posted by anmol2k4

Nissan's strategy is spearheaded by Ghosn himself, so if he had big plans for Nissan in India then why did he get into partnership with Bajaj, Mahindra and Asho Leyland ?

Ghosn must have had different plans then.. To make different products with different manufacturers. Now that things aren't working out with Mahindra and Bajaj, Ghosn has clearly said that if they want to walk out, they may do so. They still have Nissan.

[Sush]

If the JV breaks then who will be responsible for the Logan in terms of spare parts etc?
I have heard that even now people are facing problem with the spare parts availability. I faced it within 1 month of buying the car. I don't know what's the actual scene now as I came to US after owning the car for just 2 months.

[Trapezio]

Originally Posted by aaggoswami

1) Believe it or not, Logan's looks, design and powertrains are the main reason for failure.
....

2) Why did renault not think of this before ?
After all Ghosn is a proven man, then why this scenario ? IMO, the recent good products have hit Renault hard. Here again the product has to be better. Renault never took Tata and Maruti seriously in Indian market. They thought that India is a third world, so they need Logan and nothing else, but Tata, Maruti and even Hyundai have taken the game far ahead in India than what Renault can imagine.
....

I agree completely that Logan might not have been suitable. But that is not the point. The Logan was not designed for India. Its something designed for Eastern Europe.

Renault never forced Mahindra to sell the Logan here. Mahindra knew 100% what they were getting. If Mahindra - the marketing partner, was confident of selling Logan why will Renault not believe them?

Right now, after screwing up the brand, Mahindra cannot say that "oops, the car was not suitable". As far as I can see, Mahindra had total freedom in positioning, localizing and marketing the product.

If the car was not suitable why did they enter the JV in the first place?

Or to be more direct? If it was the Xylo that proved to be a failure, will Mahindra wash of their hands as simply as with the Logan?