Marketing Strategy for Logan Cars in India

Outline of the case

The joint venture of an Indian automobile company with a French company. The economic conditions in India. Changes occuring in Indian automobile industry. Indian consumers behaviour.

Stake Holders
Renault (Europes largest car maker) Mahindra & Mahindra Consumers

INDIAN AUTOMOBILE INDUSTRY

First car in 1898 Two main players in the indian automobile industry in early 1980s Hindustan motors & Premier automobiles Ltd., 1991- economic liberalization program 2002-06 automobiles grown faster than software.

Five segments in automobile industry

Segment Amicro hatchback Segment B-ultra compact hatchback Segment Ccompact sedan Segment Dsedan Segment Eluxury cars

JV Renault & Logan

Renault europes largest car maker. Logan is based on renault-nissan small car platform. Launched in 2004 as dacia logan Targeted at third world countries. Two engine variants : 1.4cc & 1.6cc Initially targeted eastern europe countries then later launched in western europe. Seeked local partners to launch in the countries, where they had no experience.

(renaults) ADVANTAGES
Manual labor Simple tooling Low labor costs Relative low capital investments Runs on low-quality fuel Unique sellling proposition is its low price.

 Indias largest farm equipment, done many unthinkable. The oscars of indian automobile industry was awarded to SCORPIO, the car of the year 2003. M&M won the prestigious deming application prize 2003. 11600 employees-500000 sqmts spread over-49 sales office-780 dealers. 2 main operating divisions *The Tractor & *Automative divisions 1999- launched Bolero 2001- launched Scorpio

M&M

MAHINDRA RENAULT
M&M Ltd and Renault of france formed a 51:49 joint venture for Rs.7 billion in india. Initial capacity of 50,000 units a year. This JV will shift M&M focus from form equipments and autos that accounts for 70% of group sales. Logan will be positioned as value for money car

THE INDIAN CONSUMING CLASS

Global indians (>10000) - 20% globizens 16% Aspiring indians (4000-10000) 10% Struggling indians (1500-4000) Destitute indians (<1500)

DECLINE IN SALES
Estimated sales 30,000 cars/yr Actual sales 1/5 th 500 cars/month Again in oct, number fell to 401, a 68% drop. A loss of 490 crore in 31.3.09 on sales of rs.740 crore. Imported engine from france. Pricing strategy.

PROBLEMS
Poor localization Pricing Dual structure excise duty Scorpio warranty is available at 9999 for two years and Renault was cost about 7500 for one year. Axle problem which included balance rod , shock absorbers, rod end.

SOLUTIONS
Top class customer service. Multiple service centers for easy access for car-owners. Reduce the size to 4 meters (boot space)

MAHINDRA BUYS OUT RENAULTS STAKE

Bought back the 49% stake from renault and becoming a 100% subsidiary. Renault will continue to support M&M and logan through a licensed agreement and supply key components including engine and transmission. The renault name and logo will be continue to use till the year end. Mahindra will now re-design the car in 4mts and mostly launch a cheaper & smaller bootversion of logan.

THANK YOU