Logan: Renault's Low Cost 'World Car'
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Case Details:
Case Code : BSTR261
Case Length : 21 Pages
Period : 1999-2007
Pub Date : 2007
Teaching Note :Not Available
Organization : Renault SA, S.C. Automobile Dacia SA
Industry : Automobile
Countries : Global
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"The Logan is the McDonald's of cars. The concept was
simple: Reliable engineering without a lot of electronics, cheap to build and
easy to maintain and repair."
- Kenneth Melville, the head of the Logan design team, in
2005.1
"People buy it more out of practicality than passion.
They're not looking for power. They're looking to get from one place to
another."
- Pascal Pozzoli, a Renault dealer in Paris, in 2006.2
"It's all about price for performance. I'd have to
pay 5,000 Euros more for a comparable car (from another manufacturer)."
- Elmar Kolle, a Logan buyer, in 2007.3
Logan's Indian Launch
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In April 2007, Logan, a successful mid-size, no-frills saloon4,
was launched in India. The car had been developed by French automaker Renault SA
(Renault), and its Romanian subsidiary S.C. Automobile Dacia SA (Dacia). The
Logan had debuted in Romania in 2004, before being introduced in several new
markets, especially in the developing parts of the world. Although the Logan had
originally been conceptualized with emerging markets in mind, the car's success
prompted Renault to begin selling it in the markets of Western Europe as well.
The Indian version of the Logan was launched through a joint venture between
Renault and the Indian automobile major Mahindra & Mahindra (M&M)5.
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The joint venture, called Mahindra-Renault, was controlled by
M&M, which had a 51 percent stake, with the rest being owned by Renault. The
Indian Logan was the first right-hand drive version of the car. Mahindra-Renault
also modified the suspension and air conditioning of the car to suit driving
conditions in India. The base version of the Logan was priced at around $10,5006
in the country.
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In India, the Logan was assembled at M&M's plant in
Nashik, Maharashtra. M&M had also announced that it would invest $950
million to build a new factory in Chennai in southern India7.
The new factory was expected to have a production capacity of 350,000
cars a year. The initial sales target for the Logan in India was 50,000
cars a year, but Mahindra-Renault was confident that the number would
increase. The auto market in India was booming, and the sales of new
cars were growing at 10 percent a year (new car sales were expected to
reach two million a year by 2010)8.
The manufacturing costs in India were also reportedly 10 percent lower
than in Romania, which was to M&M's advantage. |
Logan: Renault's Low Cost 'World Car'
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