Nissan-Leyland JV to tap India’s growing commercial vehicle market

Nissan-Leyland JV to tap India’s growing commercial vehicle market

Mumbai: Ashok Leyland, The country’s second largest commercial vehicle maker, said it expects its joint venture with Japan’s Nissan Motor to sell 55,000 light commercial vehicles (LCVs) in the first year of sale, following a launch on Wednesday.

As Asia’s third largest economy grows at nearly 8%, demand for LCVs, which carry goods across the country and are a key barometer of a nation’s economic health, is on the rise.

LCV sales in India have grown 27.4% so far this fiscal year, according to data released by an industry body, while demand for cars has taken a beating in the world’s second-fastest growing major auto market.

The 2008 JV, which has invested 1,200 crore ($246 million) so far in product development, launched its ‘Dost´ model on Wednesday, marking the Nissan-Leyland JV’s foray into the LCV segment.

Its annual sales target for ‘Dost,´ which means ‘friend´ in Hindi, is about 17% of the smaller LCV market in India.

“The LCV market is underserved, so we are seeing enough demand for the next couple of years," V Sumantran, chairman of Nissan-Ashok Leyland Powertrain Ltd, told reporters at the sidelines of the launch event.

Dost -- priced between 3,79,000-4,37,000 -- will first be launched in six states. The pricing is competitive with similar models from Tata Motors and Mahindra & Mahindra, which are priced between 3,50,000-4,50,000.

It will be made available across the country after production ramps up at its manufacturing facility in southern India, the company said.

“The joint venture will make incremental investments depending on how many products we want and at what intervals," said Nitin Seth, executive director, LCV at Ashok Leyland.

The JV will launch vans in 12-15 months, followed by the larger trucks and buses by 2015.

The smaller LCV segment has a market of about 3,25,000 vehicles per year, Seth said.

Shares of Ashok Leyland, valued by the market at $1.4 billion, have lost more than 16% of their value so far in 2011, while the benchmark has shed 19.9%. Ashok Leyland shares provisionally ended 1.7% higher on Wednesday at 26.70 in a weak Mumbai market.