The Hinduja Groups Ashok Leyland truck maker and Nissanhave 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 R. Seshasayee, MD of Ashok Leyland and Carlos Ghosn, President and CEO of Nissan.
This agreement follows the signing of the Heads of Agreement (HoA) document in August and formalises 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 which 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.
The two partners also expect to cooperate to use each others dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leylands dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.
The JV is also expected to benefit from leveraging the sourcing strengths of both the partners.
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