Logan: Renault's Low Cost 'World Car'
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Case Code: BSTR261 Case Length: 21 Pages Period: 1999 - 2007 Pub Date: 2007 Teaching Note: Not Available |
Price: Rs.400 Organization: Renault SA, S.C. Automobile Dacia SA Industry: Automobile Countries: Global Themes: New Product Development |
Abstract Case Intro 1 Case Intro 2 Excerpts
"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.
"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.
"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.
Logan's Indian Launch
In April 2007, Logan, a successful mid-size, no-frills saloon, 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).
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.
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 India. 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). The manufacturing costs in India were also reportedly 10 percent lower than in Romania, which was to M&M's advantage.
The Logan was Renault's world car9 . As of mid-2007, it was being manufactured in seven countries - Romania, Russia, Morocco, Colombia, India, Brazil, and Iran - and sold in 55 markets. The Logan had been conceptualized at a point in Renault's corporate history where the company had made a strategic decision to explore markets beyond Western Europe, the United States, and Japan. Consequently, Renault decided to design a new car that could be sold in the developing parts of the world - a market that was often not considered significant by the major auto manufacturers. The Logan's design and development had been meticulously planned around a targeted sale price of 5,000 Euros, so as to be affordable to customers in developing countries. This made the Logan the cheapest car in its class when it was launched. Eventually, the Logan became so popular that there was demand for it even in Western Europe, and Renault was able to launch a slightly modified version of the car in that market with some success....
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