Ashok Leyland, Nissan sign deal for LCV partnership

Ashok Leyland, Nissan sign deal for LCV partnership


New Delhi: Japan’s Nissan Motor Co. firmed up its partnership with Indian truck and bus maker Ashok Leyland Ltd on 29 October to jointly develop and manufacture light commercial vehicles in India.

The two companies announced a binding deal that incorporates tentative agreements reached between the two companies in August to set up three separate joint ventures for small trucks and other light commercial vehicles (LCVs).

Nissan and Ashok Leyland plan to initially invest about $500 million (Rs1,969 crore) in the three joint ventures, which include a vehicle manufacturing company, an engine and component making facility and a technology and product development center, the statement said.

“The LCV business is one of Nissan’s most important global growth engines. This agreement accelerates our LCV business in India and lays the foundation for further growth through exports," Carlos Ghosn, president and CEO of Nissan, said in the statement. “We see India emerging as an important hub in Nissan’s global LCV manufacturing footprint," Ghosn said.

Ashok Leyland will own a majority stake, 51%, in the vehicle manufacturing company, which will start production in 2010. It would eventually make at least 100,000 vehicles annually for sale in India and exports, including the Atlas F-24, a new generation small truck from Nissan, the statement said.

The decision to formalize the deal was based on a detailed evaluation of the projects proposed in the August agreements, both companies said in a statement. Nissan will have majority stake in another joint venture that will manufacture and assemble engines and other components for LCVs, it said.

The third venture will focus on developing technology and small trucks and mini buses for India and other emerging markets. It will be equally owned by the two companies.

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.

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 automaker Mahindra & Mahindra Ltd.

It is also talking to other Indian automakers for a possible partnership to manufacture an ultracheap small car that could be sold for about $3,000 (euro2,085) in India and other emerging markets.