INDIA BUSINESS WORLD - AUGUST (16th - 31st) 2007
The Month that was ...
ASHOK LEYLAND, NISSAN PLAN JOINT VENTURES TO MAKE LIGHT COMMERCIAL VEHICLES
ASHOK Leyland, the maker of heavy vehicles has entered into an agreement with the Japanese automotive major Nissan Motors to jointly develop and market light commercial vehicle (LCV) for the domestic as well as export markets.
Both the companies signed head of agreement (HoA) for the formation of three joint-venture companies for vehicle manufacturing, power train manufacturing and technology development. The HoA is a nonbinding document outlining the main issues relevant to a tentative partnership agreement in future.
The new products under the new partnership will come under both Ashok Leyland and Nissan brands.
In the initial stage, the partnership between the companies will include the development, manufacture and cooperation for distribution of LCV products under both the ALL and Nissan brands. However, these are subject to various corporate and statutory approvals from both sides.
The three joint-venture companies, proposed to be incorporated as the HoA will cover manufacture of vehicles, power trains and technology development, joint statement issued by the two companies said.
The vehicle manufacturing JV will have exclusive rights to manufacture LCV products in India for both the partners. While manufacturing facilities will be located in India, ALL will have majority stake in the venture. In the medium term, production volume, for both Indian and export markets, is expected to be over one lakh units per annum.
The joint venture company for power train manufacturing will be responsible for the manufacture and assembly of engines and other driver train components to be fitted in the LCV products and for exports. This facility will also be located in India, but will be majority stake will be with Nissan Motor Company.
The technology development venture will be responsible for the development of LCV products and related power trains, destined for the Indian and identified emerging markets. This company will be owned 50:50 by the two partners and the products developed will be sold under both ALL and Nissan brands.
In addition, the two partners are studying cooperation in the area of sales and distribution. This includes providing access to ALL's dealer network in India for Nissan, and for ALL to use Nissan dealer networks in identified export markets outside India.
"Though this agreement, ALL and Nissan seek to fulfill their aspirations to address the growing LCV market jointly by leveraging their mutual strengths," Hinduja Group of companies president Gopichand P Hinduja said.
"The possibilities are immense, for a win-win collaboration, by bringing together Nissan's tradition of engineering excellence with ALL's intimate knowledge of the market and cost efficient value addition in India," ALL co-chairman Dheeraj G Hinduja added.
According to ALL MD R Seshasayee, the company has been consolidating its growth in medium and heavy commercial vehicle segments, even while exploring suitable opportunities to expand the total product portfolio. "This partnership with Nissan, renowned for its product engineering and a wide range of LCV products, will allow ALL to expand into the fast growing LCV segments in India," he said.
"Our LCV business and overall expansion into India represents two of the biggest growth opportunities for Nissan in the medium and long term," Nissan president and CEO Carlos Ghosn, said. A few months ago, Nissan had entered into a three-way venture agreement with Renault and Mainers & Mahindra for establishing a manufacturing facility near Chennai for cars.
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