(earthtimes.org) - French carmaker Renault SA announced plans to manufacture its low-cost Logan cars in India in collaboration with its Indian partner Mahindra & Mahindra Ltd. The two companies will set up an assembly plant in India for the purpose and possibly, Renault's Japanese partner Nissan Motors may join in the venture.
Renault said the plant will become operational in 2009.
Renault's and Nissan's chief executive officer Carlos Ghosn said Renault has signed an agreement with Mahindra & Mahindra to build the plant and Nissan will decide within four months whether to invest in the facility. The plant is expected manufacture half a million vehicles annually by 2012, reports Trend.
Anand Mahindra, chairman of Mahindra & Mahindra, said in a statement the strengths of the two companies will go a long way in making India a key global automotive market
Ghosn told a press conference in Paris that this is a great opportunity for Renault's development in India, a market he predicted will grow 10 per cent annually to reach two million vehicles by 2010.
Renault and Mahindra & Mahindra have already set up a joint venture in 2005, The Mahindra Renault Ltd., with an investment of 125 million euros. It is expected to begin manufacturing Logan sedan in India from the first half of 2007. Initially, 50,000 vehicles will be made annually.
The new plant will make a range of Mahindra as well as Mahindra-Renault vehicles.
Ghosn said the proposed plant, which will be 50-50 owned by the two companies, will beat Nissan's plant in Ghangzhou, China, which cost 35 per cent less than an equivalent U.S. production site.
Renault has projected to increase its global sales by 800,000 cars annually in 2009, and the new arrangement is expected to contribute to these efforts.
Ghosn said India is one of the fastest-growing markets, which offers significant opportunities for profitability. He said the plant would attract suppliers and parts in India where 35 per cent cheaper than in Europe or Japan.