labels: ashok leyland, commercial vehicles, nissan motor company
Ashok Leyland, Nissan in joint venture pact to introduce light commercial vehicles in India news
29 October 2007
Chennai: Hinduja Group flagship Ashok Leyland and Nissan Motor Co., Ltd., today signed a binding master co-operation agreement (MCA) for the formation of three joint venture companies to enter the light commercial vehicles segment in India.

The agreement was signed in Chennai today by R. Seshasayee, managing director of Ashok Leyland and Carlos Ghosn, president and CEO of Nissan Motor Co., Ltd.

This agreement follows the signing of the heads of agreement (HoA) document in August and reflects progress achieved with the detailed project evaluation. The partnership will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

"The LCV business is one of Nissan''s most important global growth engines," said Carlos Ghosn, president and CEO, Nissan."This agreement accelerates our LCV business in India and lays the foundation for further growth through exports. Ashok Leyland shares our vision of a successful win-win partnership, where both companies are focused on value generation for all stakeholders. We see India emerging as an important hub in Nissan''s global LCV manufacturing footprint."

The two companies say the projects would require an investment of around $500 million for the creation of three joint venture companies in the following three automotive businesses:

A vehicle manufacturing company to manufacture LCVs in India for the two companies, which would be owned 51 per cent by Ashok Leyland and 49 per cent by Nissan. Production will start in 2010 and will include the new generation Nissan Atlas F24 light-duty truck, in addition to a range of products covering applications from 2.5 to 8 ton gross vehicle weight (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to grow beyond 100,000 units annually.

"With the launch of our first product in 2010 we will be able to participate in the growth of the Indian LCV market with reliable and innovative vehicles that will match the expanding need for transportation of light cargo in small to medium distances," said Andy Palmer, corporate vice president, Nissan. "We are now focused on selecting the best production site to ensure the optimum mix of efficiency of operations, logistics and quality of the output."

The second pertains to a powertrain manufacturing company responsible for the manufacture and assembly of engines and other drivetrain components that would be fitted in LCV products and for export. The shareholding in this company will be 51 per cent by Nissan and 49 per cent by Ashok Leyland.

And, finally, a technology development company, with equal share holding by the two partners responsible for the development of LCV products and related powertrains, destined for the Indian and select global markets. The products developed by this company will be sold under both the Ashok Leyland and Nissan brands.

"The Hinduja Group is firmly committed to the expansion of its automotive business globally," said Gopichand P Hinduja, president, Hinduja Group of Companies.
"Nissan, under the leadership of Mr. Carlos Ghosn, has shown exemplary vision in using partnerships for growth. With this partnership I am confident that Ashok Leyland''s growth plans in the LCV business will be realised."

The two partners also expect to cooperate to leverage each other''s dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leyland''s dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.

The JV is also set to benefit from leveraging the sourcing strengths of both the partners.

Dheeraj G Hinduja, co-chairman, said, "We hope to leverage Ashok Leyland''s marketing insight, product development capabilities and dealer network, together with the excellent engineering foundations inherent in Nissan''s global products. The products will set new benchmarks in technology and customer value."

According to R Seshasayee, managing director, Ashok Leyland, "An effective entry into the LCV segment has been on Ashok Leyland''s radar for some time now. This partnership with Nissan will allow both companies to develop a range of cost-competitive and customer-oriented LCVs targeted not only to the Indian market but several select markets overseas. We are confident that the JV structures will facilitate both companies to achieve this objective with equitable contributions."

The Hinduja Group is a multi-billion dollar global investment and banking group with a diversified global portfolio of holdings across the manufacturing services and banking sectors. The Group, founded by P D Hinduja in 1914, has activities across three core areas of investment banking, international trading and global investments. As part of its global investments, the Group owns businesses in automotive, information technology, media, entertainment and communications, banking and finance, infrastructure project development, chemicals and agri business, energy, real estate and healthcare.

Ashok Leyland is the flagship of the Hinduja Group and a leading manufacturer of commercial vehicles in India with 06-07 sales turnover of more than $2 billion. With six manufacturing locations at Chennai, three plants at Hosur, Alwar and Bhandara, the company has an annual production capacity of 84,000 vehicles which is being enhanced to 100,000 in the current year. Ashok Leyland has associate companies in the Czech Republic and the UAE and joint ventures in Sri Lanka and Bangladesh, and also exports to over 20 countries worldwide.

Nissan Motor Company generated global net revenues of 10.468 trillion yen in 2006. Nissan is present in all major global auto markets selling a comprehensive range of cars, pickup trucks, SUVs and light commercial vehicles under the Nissan and Infiniti brands. Nissan employs over 180,000 people worldwide.

Under the Nissan Value-Up business plan, the company continues to focus on long-term sustainable and profitable growth driven by three commitments:

  • To maintain top level of operating profit margin among global automakers
  • To achieve global sales of 4.2 million units in 2009
  • 20 per cent return on invested capital on average over the course of the plan

In 2007, Nissan will introduce 11 all-new products globally, with a further 33 to be introduced during the following three years.

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Ashok Leyland, Nissan in joint venture pact to introduce light commercial vehicles in India