Nissan and Renault delay India projects

Nissan and Renault delay India projects

Tokyo: Alliance partners Nissan Motor Co. and Renault SA are delaying vehicle production projects in India, where a slowing economy has taken a toll on sales of cars and trucks.

Japan’s No. 3 auto maker is reviewing a wide range of projects in the pipeline with the aim of reducing capital expenditure to improve its cash flow, a Nissan spokeswoman said on Tuesday. A planned joint venture car factory in India with France’s Renault will start as scheduled in the first half of 2010 but at one shift rather than the initially planned two, she said, mainly due to a decision to postpone by Renault. That factory is slated to have annual production capacity of 400,000 cars by 2015.

India’s Ashok Leyland Ltd had said last month it was delaying the start of production at a truck venture with Nissan by six months, blaming delay in getting the land for the project. Another Nissan spokeswoman said on Tuesday that crumbling truck sales also made the delay sensible.

Other projects in India, including a joint venture between Nissan, Renault and India’s Bajaj Auto Ltd to sell a $2,500 (Rs1.23 lakh) car from 2011, would go ahead as planned, Nissan said.

Nissan and Renault, still big players in the Indian market, have a broad range of projects, from building passenger cars to commercial vehicles, as they try to catch up with leaders such as Maruti Suzuki India Ltd and Tata Motors Ltd.

Nissan’s venture with Ashok Leyland had been scheduled to begin production during the business year starting in April 2010, with 80% of output slated for sale domestically.

Truck demand in India, the world’s fourth largest market for commercial vehicles, had been expected to grow as the government improves roads and invests in infrastructure. But a slowing economy has resulted in a liquidity crunch and a sharp drop in construction activity, squeezing demand in recent months.