Nissan, Leyland in small truck alliance

Combine to produce 100,000 vehicles annually

Renault Chief Executive Carlos Ghosn, who said last April that his company had come to India to understand "frugal" engineering and marketing, today took on a third partner in the country, Ashok Leyland.

The Chennai-based commercial vehicles maker and Japan's Nissan Motor, in which France's Renault is the single-largest shareholder, today agreed to form three joint ventures to develop, manufacture and market light commercial vehicles (LCVs). The joint venture will produce 100,000 vehicles annually in the medium term.

Renault already has a joint venture with utility vehicles maker Mahindra & Mahindra, which is rolling out the Logan sedan, and has announced another one with two-wheeler maker Bajaj Auto for a low-cost car.

"This investment will broaden our coverage of this market in addition to providing new LCV products for emerging markets. Our LCV business and overall expansion into India represents two of the biggest growth opportunities for Nissan in the medium and long terms," said Ghosn in a statement.

Nissan follows Navistar International Corp, MAN AG and other truck makers in forming ventures in India, where LCV sales rose 15 per cent to 59,959 in the first four months of this financial year.

The first of the three ventures will make Nissan commercial vehicles in India for the domestic market and overseas sales. Ashok Leyland will control a majority stake in the company.

A venture for assembling engines and related parts is also on the cards. It will be controlled by Nissan.

The third company, equally owned by the two partners, will develop LCVs and engines, and market them in India and overseas. The products developed will be sold under both the Ashok Leyland and Nissan brands.

The Nissan partnerships will allow us to expand into the fast-growing LCV segment in India," said R Seshasayee, the company's managing director.

The two companies are also thinking of collaborating in sales and distribution. This may include giving Nissan an access to Ashok Leyland's vast dealer network. Ashok Leyland may use Nissan's dealer network in identifying export markets.

Ashok Leyland expects to sign a final agreement with Nissan in October after completing a feasibility study.

Ashok Leyland shares rose 1.5 rupees, or 4.2 per cent, on BSE today, their biggest gain in over four months.