Mahindra Renault may export Logan cars from India

NEW DELHI (Reuters) - A joint-venture of India's Mahindra & Mahindra and France's Renault, which makes the no-frills Logan in India, plans to export the model as higher borrowing costs and fuel prices trim sales.

Mahindra Renault also hopes to roll out a version of the sedan which runs on cheaper natural gas in the next 2-3 months, Chief Operating Officer Nalin Mehta said on Wednesday as he launched a premium variant of the Logan.

"May be next quarter itself we'll talk about it," Mehta said of the exports plan. "We are already doing some pilots in some countries," he said, adding the company would target India's neighbours and some countries in Africa.

Higher costs of raw materials such as steel, and rising interest rates aimed at checking annual inflation at 13-year highs, have bumped up vehicle loan rates by 200-300 basis points and depressed demand.

A fuel price hike in June of 10 percent, the biggest increase in a dozen years, has further crimped consumer spending and delayed vehicle purchases.

Mahindra Renault, which started selling the Logan last year, saw its car sales fall to 5,000 units in the April-June quarter from 8,300 cars in the first three months of 2008, Mehta said. A 10-day maintenance shutdown at its manufacturing plant in western India in June also hit sales.

"Yes, the market is less buoyant than last year ... but we are just a year old," he said.

Mahindra Renault has a current annual capacity of 25,000 units, but had the equipment in place to scale it up to 50,000 units, Mehta said.

Last week, Mahindra & Mahindra launched a compressed natural gas (CNG) variant of a popular pick-up truck, while Tata Motors launched a CNG-powered mini truck in January. Market leader Maruti Suzuki also sells dual-fuel cars.

Renault is developing a low-cost car with Nissan Motor Co and Indian motorbike maker Bajaj Auto Ltd.