JV between M&M and Renault finally ends

Renault, the french auto major finally puts an end to the differences with its Indian partner Mahindra and Mahindra by announcing its exit recently. Renault presently holds a 49% stake in the joint venture that led to the production of Logan, an entry level sedan. Although the exact valuation of the deal has not been officially disclosed, the French auto-major is sure to payback the stake in the same currency.

Clearing all speculations around the impact of this closed JV on the production of Logan, Renault quoted that it would continue to be a part of the production by supplying the key components and by being an active contributor in the marketing strategies of this Logan under a licenced agreement. This agreement would however not cover any other vehicle except Logan, for example; Sandero.

Instead of stating it as a closed deal the officials from the two companies are calling it a restructured venture wherein M&M would hold 100% subsidiary. Mahindra Renault Logan would continue to be produced and marketed with the same name until the end of 2010 and both the associated brands would remain loyal to the expansion strategies of the sedan. However,after 18 months the car would sport only Mahindra's logo.

This restructuring of the deal has been a result of non-performance of the Sedan and the drooping sales figures over the years. Since its launch in 2007, the car managed to tape only 44,000 unit sales. With the sales dropping to mere 5332 units in the last fiscal, Mahindra planned to reduce the size of the car as it could then qualify in the small car segment and the company would be able to tape down on excise duties, but Renault, the venture partner was against the same.

However, with the truce finally attained, hopes are that the sedan launched under the joint venture won't suffer the consequences.