Nissan, Ashok Leyland to rework partnership

14 February 2009

In a decision that reflects the recession in the car market, Ashok Leyland and Japan's Nissan Motor Co have said they are reworking their joint venture to produce light commercial vehicles.

Among the issues being reconsidered are levels of investment, types of products to be introduced and the location of the project, Ashok Leyland's chief financial officer K Sridharan said.

"Both partners are working in terms of the revised plan. Obviously it is too early for me to comment on what will be the outcome of that discussion, so we need to wait for that," he said. But he added that there was no question of pulling out of the venture.

Nissan had said last year the joint venture would delay production by about six months to September 2011, due to the depressed demand for trucks in India. Originally, production was scheduled for the business year starting April 2010, with 80 per cent of output slated for sale in India.

The plant was to be set up in Pillaipakkam, near Chennai, with an initial capacity of 100,000 units a year. However, the companies are now exploring the option of setting up the joint venture at the Nissan-Renault facility coming up at Oragadam.

Sridharan, while emphasising that there were no changes in the structure and legal framework of the Ashok Leyland-Nissan joint venture for light commercial vehicles, said the company was considering various options relating to the location of the project, the model of vehicles to be introduced and the size of investment.