Mahindra and Mahindra is set to enter a joint venture with the French car maker Renault. The M&M board will meet early next week to approve the proposal, and the company is expected to make an official announcement on February 23. M&M will hold a majority stake in the joint venture.
The joint venture company will manufacture Renault's popular Logan three-box sedan, which will compete with the likes of Tata Indigo, Hyundai Accent and Ford Ikon.
Logan, which is originally Romanian car maker Dacia's car and was acquired by Renault in 1999, is priced at around euro 5,000 in Romania, making it a very competitive product in the C segment.
M&M's spokesperson said the company would neither confirm nor comment on the issue.
Sources in the know have indicated that the Renault cars will make their debut with the Nissan tag. Renault owns a stake in Nissan.
This is because French cars have not found much acceptance in India as was made evident by Peugot's experience in the country and Japanese brands on the other hand have hit the jackpot here.
Renault is not M&M's first car-making partner, Ford ventured into India holding on to M&M's hand and stayed on as Mahindra Ford till the two parted several years back.
Mahindra still holds a 15 per cent stake in Ford while Ford has 10 per cent stake in M&M. Anand Mahindra, vice-chairman of M&M is a member on Ford's board of directors while Ford's David Friedman is on M&M's board.
According to industry sources, the run-up to the launch of the Renault Logan will see Mahindra and Ford selling off their respective holdings in each other.
Since the Mahindra-Renault JV will make its debut in the Indian car market with a C segment offering, it will make it even more important for the two to separate as Logan will be competing with the Ford Ikon.
The market value of a 10 per cent stake in M&M is worth Rs 618 crore (Rs 6.18 billion) at today's closing price. Ford officials could not be reached for a comment.
