Rising fuel costs and higher interest costs have made cars expensive in India. It has trimmed down sales of Mahindra's Logan in the domestic car market. It now aims to export its no-frills sedan model to the overseas market. Escalating car loans that have increased nearly 200-300 basis points clubbed with a 13 year high inflation rate and rising steel and rubber costs in the country have dampened the car market spirits in the country. People have delayed their vehicle purchases due to the rising fuel costs which have made cars more expensive to maintain in daily lifestyle. Mahindra now plans to tap the overseas market with its entry level sedan and boost its sales.
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Logan is a product of joint venture between Indian auto maker Mahindra and Mahindra and France's Renault car company. It started its production of Logan last year but witnessed a gradual decline in its sales to 5000 units in April-June quarter. Mahindra Renault did not spell success stories for the company and already faces a stiff competition from Maruti Swift DZire in the same segment.
"The (mid-size) segment has turned out to be smaller than we thought and we may need to revise our product strategy for the Indian market," says Patrick Blain, Executive VP (Sales and Marketing), Renault. The company had aimed to sell 50,000 units in the local market but has managed to sell only 12175 units so far falling way short of its target by 25,000 to 30,000 units.
