New Delhi: Even as the economy shows signs of slowing, India’s second biggest truck maker Ashok Leyland Ltd and Japan’s third largest auto maker Nissan Motor Co. said they would scale up their earlier announced investment by Rs400 crore to Rs2,300 crore to form three joint venture firms to make trucks, engines and jointly develop vehicles.
The venture will start making light trucks from 2010-11, the firms said in an emailed statement. Last year, the two firms had announced that they would spend Rs1,900 crore to form three different firms.
The extra Rs400 crore “is not a cost overrun”, said R. Seshasayee, managing director of Ashok Leyland. “This is for future capacity expansion.” He did not specify to what extent the company proposed to scale up capacity.
Sales of commercial vehicle makers in the last fiscal year that ended on 31 March have slowed to 4% growth from double digits a year ago, as a slowing economy hit by a credit squeeze and six-year-high interest rates damped purchases.
Still, truck makers in India, such as Eicher Motors Ltd and Force Motors Ltd, are entering into ventures and alliances to get new technology as they seek to improve market share and meet government-mandated safety and emission norms.
Together, they are spending more than $10 billion (Rs42,560 crore) over the next four years to build new factories in the hope that higher fuel prices and newer fuel-efficient vehicles will make truckers replace their ageing fleets.
Ashok Leyland and Nissan’s truck making venture will have an initial capacity to make 100,000 units a year, the firms said. They intend to start operations with three platforms—or a system of shared components on which different vehicles can be produced—for light trucks up to 7.5 tonnes gross vehicle weight. This would include a new series of Nissan Atlas F24 light-duty truck.
The companies also said a new engine was being developed to comply with the stricter Euro IV and Euro V emission norms, rules that take effect from April 2010.