Business Today

In top gear

Mahindra Renault's Logan has been quick off the blocks.

By Krishna Gopalan | Print Edition: Sept 9, 2007

It may be still a bit early to pop the champagne, but the joint venture between Mahindra & Mahindra and Renault to make passenger cars for India is already in top gear. The first offering, the Logan, has had a good run, having clocked sales of 8,065 units from the time it was launched in April this year.

For the month of July, that number was 2,890. What this means is that the Logan has become the largest selling car in its category—which is the sedan in the “C” segment, where its competitors include the Tata Indigo, Honda City and Maruti SFX.

“We believe we have done well though the “C” segment itself is not doing too well. Our strategy will be to grow the industry,” Rajesh Jejurikar, Managing Director, Mahindra Renault, told BT. While the overall market for passenger cars is growing at about 9 per cent, the “C” segment is growing at just 5 per cent while the “B” segment (which has cars like the Maruti Zen and the Hyundai Santro) is ticking along at 12 per cent. The Logan is looking to get in consumers keen to upgrade. “We are looking to move consumers who are currently in the “B” and “B+” segments into the entry level “C” segment,” adds Jejurikar.

Other players in the “C” segment have not really had it easy. Tata Indigo, for instance, which had sales of 2,215 units in May this year, has grown marginally and ended July at 2,591 units. What has worked well for the Logan possibly has been the diesel version. Today, the sales break-up between diesel and petrol is at 70:30 and positioning strategies for each are rather clear. “The petrol version is to drive upgrades from the “B” segment. Our diesel version will be a market share fighter in the “C+” segment,” says Jejurikar.

For a price-sensitive Indian consumer, the Logan offers two petrol models and one diesel variant priced between Rs 4.28 lakh and Rs 6.43 lakh. Clearly, the pricing is something that might just be working in Mahindra Renault’s favour, along with the Logan’s unique selling proposition that it is the most spacious car (which explains its positioning as a wide-bodied car).

From a presence in 40 cities, the company will go up to 60 in the next couple of months. “The C segment looks good. More than anything else, the availability of higher levels of disposable income has resulted in people looking at cars quite differently,” thinks Arun Kejriwal, Director at Mumbai-based KRIS Securities. So, what is next for the Logan in terms of sales targets? Jejurikar lets on that the Logan has bagged a market share of 18-20 per cent in most cities in which it has been launched. It should get even more interesting from here for sure.

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