Commercial vehicle maker Ashok Leyland has signed three joint venture agreements with Japan''s Nissan Motor Company for vehicle and power train manufacturing and for technology development.

Ashok Leyland will form three companies, one of them to make LCVs, in which the Indian commercial vehicles maker will hold a majority stake. The medium term sales target is said to be 1,00,000 vehicles in a year.

The second company will manufacture and assemble engines and other drive train components for LCVs made in India and for exports, in which Nissan will have majority control. In the third company, which will focus on technology development, both partners will have 50:50 ownership. The products developed will be sold under both the Ashok Leyland and Nissan brands.

Carlos Ghosn, Nissan''s president and CEO, says that the latest deal with Ashok Leyland "will broaden our coverage of the Indian market besides providing new LCV products for emerging markets," said in the statement. Significant exports are planned.

"Our LCV business and overall expansion into India represents two of the biggest growth opportunities for Nissan in the medium and long term," Ghosn adds. "Following previous announcements relating to expanding our passenger car business in India, this latest investment will broaden our coverage of this market in addition to providing new LCV products for emerging markets. In this regard, we very much look forward to the partnership with Ashok Leyland."

According to Ashok Leyland managing director R Seshasayee, his company "has been consolidating its growth in medium and heavy commercial vehicles even while exploring suitable opportunities to expand the total product portfolio. This partnership with Nissan will allow Ashok Leyland to expand into the fast growing LCV segments in India. We look forward to harvest the full potential of the two organizations."

Nissan corporate vice president Andy Palmer says, "With the LCV breakthrough in Nissan completed one year early, we are now moving to the next phase of growth - India will be fundamental in this. Ashok Leyland represents the perfect partner for augmenting this growth and we are pleased to have reached this milestone."

Ebullient as these joint venture partners are, the joint venture will take some time to pick up speed. The agreement with Nissan is the third joint venture agreement Ashok Leyland has signed in the recent past. Analysts say that its significance is that it gives Ashok Leyland an entry into the light commercial vehicle, or LCV, segment where it has been absent.

Ashok Leyland has planned capital expenditure of Rs.2,800 crore, which is bound to put some pressure on it; some equity infusion is inevitable, market analysts say, which will have an impact on return ratios. However, at least some of them believe this JV with Nissan will have a positive impact on the company in the longer term.

The LCV segment is dominated by Tata Motors, which has a 65 per cent market share; Mahindra & Mahindra is second with a 25-per cent market share. Volvo, a major player globally, already has a significant presence. And others are threatening to enter the fray. The benefits from the agreement will accrue to Ashok Leyland only in the long-term.

The two partners are also studying cooperation in sales and distribution. If things works out as planned, Nissan will get access to Ashok Leyland''s dealer network in India and Ashok Leyland will use Nissan dealer networks in identified export markets outside India.

Ashok Leyland and Nissan Motor have so far signed an agreement that is non-binding, and further details are still awaited. The management is expected to announce the details in late October or early November.

After a not-so-successful entry into the LCV market in partnership with the now-defunct Allwyn group in the 1980s, Nissan has now re-entered the bustling Indian automotive market. In a market in which demand for cars and commercial vehicles is rising rapidly, Nissan lags way behind its Japanese rivals in India. Toyota Motor, Honda Motor and Suzuki Motor have substantial operations in India, and are expanding aggressively.

Earlier this year, Nissan signed up Renault SA of France and Indian auto company Mahindra & Mahindra to make cars. The Japanese company is also said to be talking to other Indian auto companies for joint manufacture of a low-priced small cars.