Joint Venture

Mahindra & Renault

JOINT VENTURE
Two or more firms combine equity to form a new
third entity
The level of equity can vary from very small
amounts to large multi-million dollar investments
The amount contributed by each party will not
necessarily be equal
Very detailed agreements covering what each
party is to provide, what each can expect, and
how each is to operate in the joint venture

Joint Venture of Mahindra & Renault

MAHINDRA
Set up as a steel trading company in 1945
In 1947, introduced the utility vehicle
Key operation on 18 industries
RENAULT
French car making company
Known for its Engine manufacturing and
Design

Why - JV
For Mahindra
Mahindra & Mahindra, the fourth largest Indian
vehicle maker wanted to extend its range to
passenger and family cars
To increase their Engine efficiency
Renault follows a strategy of profitable growth
(high quality, innovative range of vehicles and
services)
For Renault
Entering the Indian market
To establish international market

LOGAN

Mahindra & Mahindra and Renault have decided

to join forces to produce and commercialize
LOGAN, developed by Renault
The two groups concluded a framework
agreement for setting up a joint venture in India
with Mahindra retaining a 51 per cent share and
Renault 49 per cent
The JV will be called Mahindra Renault Ltd
The estimated project amount will be 125
million euros
The capacity of the factory for Logan will be
50,000 cars per year

Renault exits from Logan JV

Cost
Not so good looks
Excise duty (4.2 mts)
Poor marketing promotions
Manufacturing environment
The two partners have had serious differences
over the future of the venture, especially as the
only model from the company
The Logan has seen its sales go down by over 60
per cent in 2009-10, selling only 5,332 units

M&M gets license

Mahindra & Mahindra renamed the 'Logan' sedan
as Verito
Renault agreed to continue to support M&M and
Logan through a license agreement and supply
key components, including the engine and
transmission
M&M could use the Logan brand for 18 months
after which it was to drop the Renault badge
from the product as well as dealerships