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Home arrow Automotive arrow Ashok Leyland & Nissan sign agreement for LCV partnership
Ashok Leyland & Nissan sign agreement for LCV partnership Print E-mail
Written by Arjun   
Tuesday, 30 October 2007
MUMBAI: 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 supporting the Light Commercial Vehicle (LCV) business.  The agreement was signed in Chennai today by Mr. R. Seshasayee, Managing Director of Ashok Leyland and Mr. 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. It formalizes the partnership between the companies, which will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

The two companies anticipate an investment in the neighborhood of US$ 500 million for the creation of three joint venture companies that are to cover the following business areas:

Vehicle Manufacturing Company – a company with exclusive rights to manufacture LCV products in India for both the partners. Manufacturing facilities will be located in India and the company will be owned 51% by Ashok Leyland and 49% 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.

Powertrain Manufacturing Company – responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing will be located in India and the company will be owned 51% by Nissan and 49% by Ashok Leyland.

Technology Development Company – responsible for the development of LCV products and related powertrains, destined for the Indian and select global markets. This JV company will be owned 50:50 by the two partners and located in Chennai. The products developed will be sold under both the Ashok Leyland and Nissan brands.

In addition, 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.

Executive comments:

Mr. Gopichand P. Hinduja, President of the Hinduja Group of Companies:

“The Hinduja Group is firmly committed to the expansion of its automotive business globally. 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.”

Mr. Dheeraj G Hinduja, Co-Chairman, Ashok Leyland:

“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.”

Mr. 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.”

Mr. Carlos Ghosn, President and CEO, Nissan:

“The LCV business is one of Nissan’s most important global growth engines. 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.”

Mr. Andy Palmer, Corporate Vice President, Nissan:

“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.

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.”
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