Not brooding over the financial instability, Renault is on the verge of setting up an engine facility in India. The proposed facility may come off near the company’s complex situated in Oragadam in Chennai. The move is to make free flow of engines and transmissions for the low profile Logan sedan which is to be under the control of M&M India. The move will further reduce the cost of the car when M&M would manufacture Logan on its platform. In normal practice, engine and transmission share 35-40% of the total cost of the vehicle. M& is currently getting engines and transmissions from Renault’s Romania and Spain units allied with the import levies.
The engines which M&M imports are of 1.4 lit and 1.6 lit diesel engines and 1.5 lit petrol engines. In the meantime, M&M has come out with a slash of Rs80000 on Logan though no technical modifications have been labeled on the car. Effective last week, M&M has got exclusive control of the JV Mahindra Renault Pvt Ltd. Subsequently, Renault will go ahead with manufacturing engines on its own specifications and M&M would procure such engines and transmissions for the refined Logan [image]. Renault thus will fulfill its mission of having an engine unit in India despite its financial instability, said its official. A final word about the proposed launch of this engine facility would be made public soon, he added. A normal engine facility may involve an investment of Rs900-1200crore based on the size of the facility.
Once the facility gets started it will feed engines to Renault, Nissan and M&M. of these companies, Renault and Nissan have the freedom to choose the engines of their choice along with the flexibility to tweak them. In addition these two companies are in the form of sharing the platform for making cars by saving costs. The plant in the South India costs Rs4500 crore investment with the production capacity of 4 lakh units a year. M&M will utilize the platform mainly for making Logan sedan by availing the technical know-how from Renault. M&M gets engines and transmissions from Renault’s Spain and Romania facilities by shelling mammoth import levies. Renault supplies 1.4 lit and 1.6 lit diesel engines and 1.5 lit petrol engine to M&M, which made M&M to slash the price of Logan by Rs80000. However, the vehicle does not undergo any technical modifications.
Renault is contemplating on initiating an engine facility in India and would like to source engines for Logan made by M&M. the financial crisis is no way connected to Renault’s move in this regard. The move by both Renault and M&M would end up in the reduction of the cost of the vehicle. The plant initiated by Renault would invite an investment of Rs4500 crore at an annual capacity of 4 lakh units.