MUMBAI (Reuters) – Renault is talking to its Indian partner, Mahindra & Mahindra, about restructuring their joint venture that makes the Logan sedan, and said a decision will be made in 30 to 45 days.
Renault also announced plans to set up its own dealer network in India, starting with 15 dealerships by mid-2011 and increasing to 150 in the next 30 months, country head Marc Nassif said.
"The Indian car market is set to triple in the next 10 years. It is never too late to come to India," Nassif said.
Sales of the no-frills Logan have declined since 2008 after a favorable start in India. A key issue has been pricing, as at more than 4 meters in length the Logan incurs a factory gate duty of 20 percent, making it expensive for its target segment.
"We are exploring various options for the joint venture MRPL (Mahindra Renault Pvt Ltd) as a business and Logan as a product," Renault India's Chief Operating Officer Sudhir Rao said.
Roa said Renault was confident it could announce a solution that would be "extremely positive" for both companies, but would not comment on what form the restructuring would take.
Mahindra said in a statement it had confidence in the Logan and that it would continue to sell through its current network. The joint venture has about 110 dealers across India.
Renault owns 44 percent of Japan's Nissan Motor Co., and the two firms plan to build an ultra low-cost car in India in partnership with motor bike maker Bajaj Auto, with a launch expected in 2012.
The Renault-Nissan alliance is investing 45 billion rupees ($974.03 billion) over seven years building a plant in Chennai, southern India, that will have annual production capacity of 400,000 units.
Renault had frozen its investment in the plant for more than a year before restarting it this year, while Nissan had kept building.
Renault now plans to launch several new cars for India within 18-24 months and a full range in four years, using capacity built by Nissan that is expected to be ready by May.
Nassif said the timing of a second production line at the plant would be affected by demand conditions.
"Don't expect a decision on Renault's line of production in 2010, which is a tricky year, with the scrapping of incentives in Europe and rise in raw material prices," Nassif said.
At the Delhi auto show in January, Renault said it would produce its new premium vehicle, the Fluence, and the Koleos crossover in India in 2011.
The company has also announced plans to build a compact car in India after 2011.