By on April 21, 2010

The emerging car market in India isn’t emerging fast enough to keep some car companies alive. Three years after Renault started to build its low-cost Logan in India, Renault is pulling out. The ho-hum sales come as no surprise to the attentive TTAC reader. As previously noted, India sells in a year what China consumes in a month in terms of cars.

According to The Nikkei [sub], India’s Mahindra & Mahindra and France’s Renault filed for divorce and agreed to dissolve their joint venture in India. The reason? Weak sales despite India’s growing car market.

Mahindra will buy Renault’s 49 percent in the joint venture, and Renault will be outta here.

Under the terms of the divorce settlement, Mahindra can keep the tools to the Dacia Logan. However, they will lose the rights to the Renault brand next year. The Logan will need a new name after 18 months.

Mahindra plans to make the Logan smaller. They think, smaller cars are an easier sell, they are also taxed lower. Previous plans to shrink the car fell on deaf ears with the French joint venture partners. The plant is operating at about 10 percent of its annual production capacity of 50,000 cars.

Those who think that Renault bids au revoir totally to India, are mistaken. The will go upmarket. Renault will produce the upscale Fluence sedan and the Koleos SUV together with their buddies at Nissan. And who knows, maybe Daimler will join the fray.

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