The Logan is a case study in driving down costs. Drivers turn on the ignition with an “old-fashioned,” manual key; there is no cruise control. The windshield glass is nearly flat, which makes it less expensive to produce. The left and right outside mirrors are identical; the ashtrays are exactly the same as the ones used in another Renault model, the Espace. Similarly, Logan shares an engine and gearbox with Renault’s Clio subcompact. For these and other components, high manufacturing volumes translate into economies of scale.
Production of the first Logan models began in Romania in 2004. The choice of an assembly site was dictated by simple economics: France’s high labor rates and payroll taxes would have translated into an additional €1,000 ($1,400) cost per vehicle. The Logan was launched in India in April 2007 with a sticker price of about $10,000; the vehicle was manufactured by a joint venture between Renault and Mahindra & Mahindra (M&M), one of India’s best-known industrial conglomerates. After a dispute between the partners, the joint venture was dissolved. Mahindra & Mahindra now produces Logans under a licensing agreement.
In 2008 a hatchback model, the Sandero, was introduced. It was followed in 2009 by the Duster sport-utility vehicle; the Lodgy debuted in 2012. In 2012, Renault sold a record 2.55 million vehicles, 25 percent of which were low-cost models. Sales were split roughly evenly between the Logan and entry-level Renault models.
As it turned out, the geographic distribution of sales indicated that Renault’s strategy was in trouble: Although the Logan was targeted at emerging markets, it was a big hit with consumers in affluent European countries.

Questions
1. What is the key to the Logan’s low price?
2. Do you think Tata will be able to save the Nano? Which steps should the company take?
3. Assess Carlos Ghosn’s plans to revive the Datsun nameplate in India. Can a car that sells for $3,000 generate a profit for the parent company?
4. Low-cost cars such as the Nano and Datsun lack the multilayered safety and quality features required by regulators in high-income markets. Is it appropriate to create
“bare-bones” cars with fewer safety features for emerging
markets?