The JV begun selling the mid-sized sedan in April-May last year through M&M's dealerships across the country.
Patrick Blain, executive VP (sales and marketing) Renault, who was quoted in a report, said, "The (mid-size) segment has turned out to be smaller than we thought and we may need to revise our product strategy for the Indian market."
Renault had earlier targeted sales of 50,000 units in the local market by 2008-end. The company sold 12,715 cars in the first six months of this year, falling way below the target of 25,000-30,000 units.
Blain further said that it is unlikely that the targeted sales will be achieved by the joint company, Mahindra Renault Private Limited (MRPL), this year. The company produced less than 1,100 cars in June, a sharp decline from the earlier monthly production tally of more than 2,500 cars. Sales, too, fell by 11 per cent in the last quarter.
The fall in expectation of sales is generally due to the fact that the Indian market has been dominated by compact and fuel efficient cars, which constitute about 70 per cent of the total vehicle sales.
Nalin Mehta, VP (sales and marketing), MRPL, said, "The automobile sector is facing difficult times; the situation begun to tighten four months ago. No vehicle manufacturing company, including us, is thinking of expanding operations currently. The slowdown has impacted our sales as well."
Last year, the company planned to have 100 Logan dealers across the country but managed only 94. The target for the year is to have 150 dealers in place and company officials say that the dealer expansion programe will move ahead as planned despite the slowdown.
Accentuating the slowdown worries, the company doesn't expect the entry level mid-size segment to grow as planned, which, according to some analysts, should have been in the range of 12-14 per cent. The small car segment, meanwhile, grew by nearly 15 per cent in the April-June quarter.
The Logan, an entry level midsizer priced at Rs 4.25 lakh (ex-showroom Mumbai), is pegged against the Maruti Suzuki DZire, the Ford Ikon, the Hyundai Accent and the Tata Indigo. MRPL claims to have garnered a market share of 12 per cent in the segment through the Logan.
The company is also planning to introduce the Sandero, which is based on the Logan platform. However, these plans have been pushed to next year as the focus currently is fully on consolidating the Logan in the local market, added Mehta.
The JV is a 51:49 partnership between Mahindra and Renault, which has already infused about Rs 700 crore in setting up a greenfield facility in Nashik that has a production capacity of 50,000 units per annum. The facility has a stamping and a paint shop with a pre-treatment and an assembly line.
