The Hindu Business Line : M&M-Renault tie-up: Marriage of convenience

The tie-up between Mahindra & Mahindra (M&M) and Renault for setting up a volume car plant in India may be the logical next step after their plans to introduce the Logan in the country but it is significant for two reasons, according to a leading observer of the car industry who was an active participant not too long ago.

First, the Renault investment represents the first volume car entry from Europe.

"Players such as Peugeot and Fiat have been here in a small way but they have been successful neither commercially nor financially. This is the first time we have a European manufacturer investing in volume car production in India," said the observer, who preferred to remain anonymous.

Renault is clearly upping its stake in the country and its entry could mean that there is renewed interest from European manufacturers in cracking the volume market.

The Nissan factor

The second reason why the tie-up is significant is because of the association of Nissan in the deal.

Nissan is trying to make up for lost time and catch up with its Japanese competitors Honda and Toyota who have made a success of their presence in the Indian market.

"Nissan saw how Honda is well established in the market with the Civic being a big success and Toyota doing well for itself too and said, hey, what's happening, we can't stay out of this market", he said.

Nissan has a reasonably decent strategy in China but nothing at all in India and this could be its strategy to carve out a place for itself in the Indian market.

Ford experience

When asked what was there in the tie-up for M&M which has been through a similar deal with Ford earlier, the industry observer said that it was a "marriage of convenience" for both M&M and Renault.

Alluding to the earlier joint venture with Ford, the gentleman pointed out how M&M acquired precious knowledge and expertise in technology, systems and manufacturing processes from Ford even as the latter got a toehold in the dealer and supplier networks of the country.

But what is there for M&M to learn now from Renault? "Production scales are changing, design architecture is changing and so is technology. So M&M can look forward to learning the latest in these.

It has established itself well in utility vehicles and tractors but cars are a different ball game," said the industry observer.

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