Nissan Gets Indian Truck Deal
Wednesday, August 29th, 2007
Japan’s Nissan Motor Co. has teamed up with Indian truck and bus maker Ashok Leyland Ltd. to jointly manufacture small trucks and other light commercial vehicles in India using their truck parts.
The deal underscores Nissan’s growing interest in India, where demand for automobiles is rising fast thanks to robust economic growth. Nissan has lagged behind its Japanese rivals in tapping opportunities in India, both as a market and as a manufacturing base.
Leading Japanese automakers, including Toyota Motor Corp., Honda Motor Co., Suzuki Motor Corp., have significantly expanded their operations in India in recent years.
Nissan made its first move to enter India earlier this year, signing up for a passenger car venture with its partner, Renault SA of France, and Indian auto maker Mahindra & Mahindra Ltd.
The three are building a large plant near the southern Indian city of Chennai, which Nissan would use to manufacture and export compact cars to Europe.
Nissan is also talking to other Indian automakers for a possible partnership to manufacture an ultracheap small car that could be sold for about US$3,000 in India and other emerging markets.
The latest deal with Ashok Leyland “will broaden our coverage of (Indian) market in addition to providing new LCV products for emerging markets,” Carlos Ghosn, Nissan’s President and CEO, said in the statement.
Under the deal, Ashok Leyland will own a majority stake in a joint venture with Nissan that will have the exclusive rights to make light commercial vehicles, LCVs, for both partners, the statement said.
This venture will initially produce at least 100,000 vehicles annually for sale in India and exports, it said.
Nissan will own a majority stake in a second joint venture company with Ashok Leyland that would manufacture and assemble engines and components for LCVs in India, the statement said.
“Ashok Leyland has strengths in large and mid-sized trucks, while Nissan’s strength lies in smaller vehicles. So we see a potential to supplement our strengths and create a positive synergy,” Nissan spokeswoman Ikue Matsuura said in Tokyo.
“Nissan also sees India as a key emerging market,” she said.
Nissan and Ashok Leyland will set up third joint venture focussed on developing technology and small trucks and mini buses for emerging markets, the notice said. It will be equally owned by the two companies.
Shares of Ashok Leyland rose 4.15 percent to 37.65 rupees in trading Wednesday.
“This partnership with Nissan, renowned for their product engineering and a wide range of LCV products, will allow Ashok Leyland to expand into the fast growing LCV segments in India,” R. Seshasayee, managing director at the Indian company, said in the statement.
Both companies are also studying cooperation in the area of sales and distribution, it said. This includes providing access for Nissan to Ashok Leyland’s dealer network in India and allowing the Indian partner to use Nissan’s dealer networks in select export markets.
The deal is subject to regulatory and corporate approvals, it said.
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