M&M ups ante in car mart with Logan

France's second-largest carmaker, Renault SA, today announced the launch of the Logan sedans in India through its joint venture with Mahindra & Mahindra and became Europe's first mass market car maker to enter Asia's fourth-biggest car market.

The base variant of the three-box car is intended to compete with premium hatchbacks, such as Maruti Udyog's Swift and Hyundai Motors India Ltd's Getz, while the higher variants will race against mid-size cars like Ford Fiesta, Hyundai Verna, Chevrolet Aveo, etc.

It is priced accordingly. Unveiled in Mumbai today by Renault chief executive officer Carlos Ghosn and M&M managing director Anand Mahindra, Logan's base 1.4 litre petrol  version will be priced at Rs 428,000 (ex-showroom, Mumbai). The most expensive 1.6 litre model will sell for Rs 569,000, while the 1.5 litre diesel variant will cost Rs 644,000.

"We have been able to keep the price low by balancing the local content with the import," M&M's president (automotive) Pawan Goenka told Business Standard. The car's local content is 50 per cent. Its engines, which comprise 30 per cent of the total, come from Romania and Spain. The Logan's production cost in India is about 10 per cent less than in Romania, one of the six countries where the car is built.

"The production has kicked off one month ahead of schedule and the cost of the project is 15 per cent lower than the forecast... India is one of the world's fastest growing markets today. It offers significant profitability sustained by economic growth and increasing purchasing power," said Ghosn.

The Logan will be built in India at Mahindra's factory at Nashik that has been upgraded to produce as many as 50,000 cars a year.

"With so many models across so many segments, the latest entrant is expected to increase the competition and improve the quality of products. The existing players will be forced to perform well to stay afloat in the industry," said an auto analyst with ASK Raymond James.

Renault is also considering a hatchback based on the Logan platform in India and may make a decision in "a few months", according to Patrick Pelata, Renault's head of strategy. The company is also likely to build trucks in the country and a decision will be taken by the end of this year.

The financing of the Logan in India will be done through M&M finance and also through the Renault bank, a vehicle financing arm of Renault. Cars will be available through joint outlets bearing badges of both the companies.