Logan: Renault’s low cost ‘world car’

Presented by:
(Group 4)
Alok Sanghvi
Ronak Jasani
Saumya Singhal
Shailesh Gupta
Sachin Jain
Sandeep Kejriwal
BACKGROUND
 Set up in 1898 by ‘Louis
Renault’

 Primarily an assembly
operation

 Also manufactures Taxi cabs,

Buses & Commercial cargo
vehicles

 Started experimenting with

Aircrafts & Army tanks and
First car – ‘VOITURETTE 1 CV’
soon became the biggest
manufacturer of Aircraft
Engines in the world
CONT…
 After WW1 it diversified into agriculture & industrial
machinery

 1939-45 (WW2) – commissioned to produce trucks for Nazi

Germany which halted the production of passenger cars

 Louis died in imprisonment

 Company got nationalized

 Entered into technological cooperation with VOLVO and

Peugeot

 Purchased 46.4% stake in American Motor Corporation(AMC)

 Renault 4 CV Dauphire

Renault 4 Renault 8 Renault 5

CONT…

 Despite success with passenger cars, the company began

making losses in 1980’s

 Sold off its stake in AMC to Chrysler corporation for

$200 million

 In 1990 - Got incorporated as Renault, which was the

first step towards privatization

 Launched several successful car models like CLIO,

Espace, Twingo, Laguna & the Renault 19
CONT…

 1999- Made a cross-holding alliance with Japan’s

NISSAN Motors for $3.5 million for 36.8% equity stake

 Also acquired Romanian auto company DACIA for $50

million

 Acquisition of a 70% stake in South Korean SAMSUNG

motors for $512 million

 Became the fourth largest company in the world after

GM, Toyota Corp. and FORD
PROJECT X90

 Strategic decision to expand its presence in market outside

western Europe

 STP

 Renault acquired Dacia in 1999

 Low cost vehicles for the market

 First product a mid sized passenger saloon

 Sell the X90 under a brand name “LOGAN”

THE MAKING OF LOGAN

 Designed to strict specifications

 Different from other cars

 Best Technology and shared expertise

 Vision and Mission

 Competitive advantage

 Idea behind
KEEPING COST LOW
 Logan was a ‘Design-to-Cost’ project.

 Manufacturing the Logan at Dacia’s Mioveni factory.

 Sourced most of production material locally.

 Costs control by keeping structure of Logan simple.

 Symmetric parts made tooling and assembling easier.

 Logan was a completely computer-designed by

designers.
LOGAN’S SAFETY & SPECIFICATIONS

Safety Measures:
 Designed as per EU safety norms

 Top-end Logan include Anti-lock Braking System

 Total safety for driver as well as passenger

 Honeycomb type structured Dashboard

 Logan structure was designed to disperse kinetic energy due

to impact of collision
CONT…

Technical Specifications:

 Logan was a three box saloon.

 Developed with two engines versions.

 In 2005 Logan was launched with 1.5 dci diesel engine.

THE LAUNCH & ITS AFTERMATH

 Renault launched Logan in June 2004 priced at 5000

Euros

 First launched in Romania and then in Central and

Eastern European markets

 High potential for cheap cars

 Initial response to Logan was very positive

 Reaction to Logan in Western Europe was not anticipated

CONT…

 In June 2005, Renault launched a modified version of

Logan for customers in Western Europe

 In 2005, Renault sold 145,000 units of Logan world wide

 In April 2007, Logan was launched in India through a

joint venture between Renault and Mahindra and
Mahindra
THE PROSPECTS
 Launch of Logan MCV, a station wagon in 2006

 Launch of minivan version in 2007

 Biggest strength:- Low price

 Logan’s market not limited to lower income groups

 Main shortcoming:- Looks of the car

 Low end version lacking basic features

 Logan’s average rating of 3 in Euro NCAP tests

CONT…
Impact on other car manufacturers:
 Volkswagen announced a project codenamed 3-K

 Manufacturers in developing countries were also

working on extremely low-priced cars.

 Toyota announcing radically different process of car

manufacturing
CONCLUSION
 Logan making a mark on global automobile Industry

 Only one doing cost reduction aggressively

 Renault’s ‘design-to-cost’ approach giving them an edge

over others.

 Others failed due to wrong cost structures & lack of

recouping costs from upgrades & extras.
WHY DID ‘LOGAN’ FAILED IN INDIA?
 Price hardly lower than its competitors

 High import rate

 Indian Government coming up with double excise

duty

 Problem with distribution channels