MUMBAI: Nissan Motor Co., Japan’s third- biggest automaker, will join Renault SA and Mahindra & Mahindra Ltd.’s venture to build cars in India, said two people familiar with the plan. The three automakers will make an announcement on 26 February, they added.
The companies will set up a factory in Southern India’s auto hub of Chennai, the people said, who declined to be identified before the announcement is made public. The factory will be 50% owned by Mahindra, while Nissan and Renault will each have a 25% stake, the people said.
Carlos Ghosn, who heads Nissan and Renault, cut Nissan’s earnings forecast this month amid a sales slump in the US and Japan, Nissan’s two biggest markets. Nissan expects an increase in car demand by more than 10% a year in India as economic growth boosts salaries.
“India is the place to be in the auto industry now,” said KK Mital, who helps manage $40 million (Rs177 crore) at Escorts Asset Management Co. in New Delhi. “The demographics are in favor of strong, sustained growth here and that is why auto companies are investing billions,” he added. Mahindra President Pawan Goenka declined to comment.
The factory that the three carmakers will share will have a capacity of 300,000 vehicles a year by 2009 and 500,000 by 2012.