A joint venture of India’s Mahindra & Mahindra and France's Renault are affected by the increased fuel prices which resulted in slow car sales. The venture has now decided to export its leading sedan, the Logan. The export market is mainly targeted to the neighbour countries and Africa.
The reason for a sudden decision to export Logan is the high costs of raw materials, rising interest and inflation. The fuel price hike in June is considered to be the biggest hike in the past 13 years and this has eventually pulled down the car market.
Mahindra-Renault witnessed the descending sales report of 8,300 units in the first three months of 2008 to almost 5,000 units in the first quarter of the fiscal year. The current market is less buoyant and therefore the company plans to earn revenue and profit margins through export.
The joint venture today has a total capacity of 25,000 units which was expected to increase following the market situation. Unfortunately, the capacity is the same and car sales have gone down, resulting in a heavy loss.
Mahindra Renault also plans to roll out a cheaper version of the Logan that will run on natural gas in next few months.
Renault has also signed a joint venture with Nissan Motors and Bajaj Auto Ltd. to produce a low-cost car. The company is trying alternative ways to boost the car sale.
Mahindra-Renault Joint Venture has great expectations from the international market. We really wonder will this help them because the inflation has occurred globally.