Utility major Mahindra & Mahindra and French auto maker Renault Spa’s four-year old marriage of convenience in India, seems to be on the rocks.
With M&M launching Xylo on Tuesday, the joint venture has called off the launch of a seven seater version of the Logan (MCV) citing lack of economic sense. Logan MCV would have competed directly with the Xylo. With this, what looked like a global strategic alliance has turned out to be just a one product fling.
Mahindra Renault were earlier expected to launch the Logan MCV this year, but a Renault official told Hindustan Times that the project has been put off and the joint venture will only have the existing Logan in its kitty.
“The 7-seater was being considered but it did not make economic sense and hence has been put off 2 months back,” said Ashish Sinha Roy, vice-president, corporate affairs, Renault India.
“There are capacity constraints at the Nashik plant and this year there will only be a facelifted Logan.” Logan which was launched in April 2007 with an installed capacity of 50,000 units per annum. Since its launch only about 39,000 units of the car have been produced. “The excise duties on smaller cars are way lower than mid sized sedans and that has impacted sales of Logan in a big way,” said Rajesh Jejurikar, executive vice president, sales and marketing, M&M. “We have scaled down production from 2,000 to 300 units per month.”
M&M admitted that there could be cannibalisation between the Logan and Xylo. “The Xylo is placed between the Logan and Scorpio, so there would be an impact on both these segments,” said Pawan Goenka, president automotive sector, M&M. Last year, M&M had walked out of the tripartite Chennai project with Renault-Nissan.