End of Renault-M&M partnership?

Hinting the biggest drop that all is not well in its partnership with Mahindra & Mahindra, French auto major Renault said on Wednesday if things did not work out, it can sever ties and may even drive in its new product in India with a different partner.

Renault, which has a joint venture with M&M that sells entry level sedan Logan, has been a subject of speculation over its relationship with the Indian partner and declining sales of the car had put a question mark over the future of the JV -- Mahindra Renault Pvt Ltd, in which the French firm has 49 per cent stake.

Renault has other alliances with Bajaj Auto for a small car project and Ashok Leyland through Nissan for light commercial vehicles in India.

"I am not saying we will, I am saying we can. I don't want anybody to be surprised. We have today three partners (in India). Our intention is to continue with the three partners,

but if it is not possible, I can tell you that we need at least one," Renault president and CEO Carlos Ghosn said at the Tokyo Motor Show.

He was responding to a query if Renault was unhappy with any of its Indian partners, particularly with M&M, following the dismal performance of Logan in India.

"It is a matter of concern, every time your sales go down on any model not only in India, we always check why . . . We are going to try sometime, if it does not work we will go for second time with a decent car and eventually with a different partner, does not matter. We are in India to stay," he said.

Logan has failed to live up to expectations and sales have been on a down slide. In September only 510 units of the car were sold compared to 1,752 units in the same month last year.

In the first six months of this fiscal, the JV sold 2,901 units of Logan compared to 9,217 units in the same period last year.

He said the failure of Logan was because 'it is more expensive than we hoped it would be in India, the Indian market is extremely sensitive to the price. Another reason is we don't have enough localisation in India.'

Renault is learning from its current experiences in India and 'we are going to come with a second wave of products', he said without specifying details.

The company is speculated to drive in its sedan Sandero, to India in the near future.

Ghosn said while Renault is on a learning curve through its partnerships with M&M, Bajaj Auto and Ashok Leyland and in the long run it is going to stay put with at least one of the three partners.

"What I can tell you is that we are certainly going to stay with at least one of them.

"We may on the long run severe the relationship with one of them, so and so with another one. I can't tell you what's going to happen but we need at least one partner in India," he said.