Mahindra and Mahindra, the maker of tractors and utility vehicles, whose foray into the car market in a joint venture with Renault has been marred by public spats over management control, has started calling back some of its top executives in the JV, a clear indication that the agreement with the French company could be nearing an end.
In the recent past, three M&M executives have left the joint venture as the two partners appear to be on the verge of separating. Nalin Mehta, the CEO of Mahindra Renault who has been appointed the new chief operating officer of Mahindra Navistar, the JV with the US Company which will roll out heavy trucks, is the most recent and high-profile executive to return to the parent group. Jyoti Malhotra, the head of sales, and K Ravi, who was in charge of services, have also returned to M&M.
Mr. Mehta’s appointment as the COO of Mahindra-Navistar was announced internally at the end of last week while Mr Malhotra and Mr Ravi returned earlier this year. No public announcement has been made.
M&M’s spokeswoman said that it was the company’s policy to deploy key managers in different parts of the group. “In any scaled down activity, a realignment of business operations is imperative. It’s part of the M&M policy to look at frequent job rotations within the company and its part of the career planning.”
Renault had recently announced that it is setting up its own distribution network in India to handle future product launches and had also promised a statement on the future of the troubled joint venture, known as Mahindra Renault Private Ltd or MRPL, later this month.
Renault, which sells the mid-size car Logan through MRPL, has said its plans to launch Fluence sedan and Koleos, a cross-over vehicle that combines the features of a car and a sports utility vehicle, in India in 2011.
Officially, both M&M and Renault have maintained a diplomatic silence though the differences between the two have been in the public domain for a while. The two companies have been unable to agree on product development, innovation and pricing.
M&M is understood to be unhappy with MRPL because it wants a greater say in engineering decisions, something which the French automobile major is unwilling to countenance. With the managements not pulling along, Mahindra Renault, a 51:49 joint venture between the two partners, is struggling to sell cars in large numbers due to uncompetitive pricing.
The JV, which retails only the Logan, has seen sales fall from peak levels of 2,000 a month in 2007 to just 500 units a month in a booming market. In the April to February 2010 period, sales plunged 60% to 4,981 units. MRPL dealers have been dissatisfied with the very public inability of the two partners to get along.