Nissan to launch truck ventures in India

Business Materials 30 October 2007 06:17

Nissan Motor inked a $500m joint venture Monday with Indian truckmaker Ashok Leyland to produce light trucks and engines in India for both domestic and export markets.

During his visit to India this week, Carlos Ghosn, chief executive of Nissan and Renault, will also discuss a possible partnership between Renault and motorcycle maker Bajaj to produce a $3,000 car that would rival Tata Motor's planned "one-lakh" ($2,500) car in the race to capture share in what is the world's fastest-growing passenger car market.

The multi-pronged entry into India is a way for Renault to meet ambitious sales targets and diversify from Europe's saturated market which accounts for a majority of the French automaker's sales. Ramping up in India would also bolster Nissan's slowing sales of cars and trucks in Japan.

Renault already has a joint venture with Indian automaker Mahindra & Mahindra, which launched the Logan sedan in India this spring.

To further expand its reach, Renault this summer agreed to jointly assess with Bajaj the production of "very competitive vehicles" in India. Collaboration is still under discussion. But at the Tokyo Motor Show last week, Mr Ghosn reiterated that it was possible to make a $3,000 car for the Indian market.

Automakers are keen to tap the potential of India's growing auto market. The country will move from being the 12th largest producer of passenger cars and light commercial vehicles to the fourth-largest by 2016, according to automotive research group CSM Worldwide. It is the world's fastest-growing automotive market in those categories, with an annual growth rate of 14 per cent compared with 9 per cent in China.

The agreement between Nissan of Japan and Ashok Leyland "accelerates our light commercial vehicle business in India and lays the foundation for further growth through exports," said Mr Ghosn at a press conference in Chennai. India will be an important hub for Nissan's light truck production, he added.

Monday's agreement with Ashok Leyland consists of three joint ventures. One company will manufacture light commercial vehicles (LCVs) for both partners by 2010 and is expected to eventually roll out 100,000 vehicles a year. The second will build and manufacture engines and components for LCVs and export. The third, a technology development company, will make other truck products and components.

The Indian auto industry last year produced 11m cars, trucks, buses, motorcycles and other motor vehicles. An ambitious government and private-sector "Automotive Mission Plan ", outlined last year, set a production target of 3.2m passenger cars by 2016, up from 1.3m in the 12 months through March. ( FT )