Maruti to build cars for Nissan

Japanese auto majors Nissan and Suzuki have announced an expansion of their alliance which would involve production of Nissan cars by Suzuki's Indian subsidiary, Maruti Udyog. The two companies already share production facilities in Japan by supplying vehicles under each other's brands.

The exact time frame for production of Nissan cars by Maruti or the models to be produced have not been revealed. But it is expected that Nissan would source small cars from Maruti for the European and Indian markets.

There has been some media speculation that Nissan is eyeing a large financial stake in Suzuki to beef up its small car range. Suzuki is one of the largest manufacturers of small cars and such a tie-up would help Nissan to penetrate emerging markets.

General Motors, which held a nearly 20-per cent stake in Suzuki, had sold off most of its stake recently to improve its precarious financial position.

Nissan currently has only one model, the SUV X-Trail in India. The company is importing the model as a fully built unit, which makes it very uncompetitive in terms of price.

There are unconfirmed reports that Maruti is planning to launch Nissan's small car model Moco as the replacement for its B-segment model Zen. Moco is produced in Japan by Suzuki, which sells it under the name MR Wagon.

Maruti said yesterday that the company would have to expand production capacity to meet Nissan's needs. The company's new plant in Manesar is expected to go on stream by the end of this year. The new plant would have a capacity of 1 lakh-units per annum which may be increased to 2.5-lakh units over the next three years.

Maruti and Suzuki have also floated a JV to produce diesel engines and transmission systems, which is also expected to go on stream by end of this year.

Incidentally, French auto major Renault holds a nearly 45-per cent stake in Nissan. Carlos Ghosn, who as CEO of Nissan turned around its fortune in the '90s, is currently the CEO of Renault as well. Renault has a JV with Mahindra & Mahindra to manufacture the former's low-priced sedan model Logan in India. The car is expected to be launched by next year.