Ashok Leyland and Nissan Motor signed a Heads of Agreement (HoA) for the formation of three joint venture companies supporting the Light Commercial Vehicle (LCV) business.
This first stage of the partnership between the companies will include the development, manufacture and cooperation for distribution of LCV products under both the Ashok Leyland and Nissan brands. These are subject to various corporate and statutory approvals from both sides.
The three joint venture companies detailed in the HoA 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 majority owned by Ashok Leyland. In the medium term, production volume (for Indian and export markets) is expected to be above 100,000 units annually.
Powertrain Manufacturing Company - responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in the LCV products and for exports. Manufacturing will be located in India and the company will be majority owned by Nissan Motor Company.
Technology Development Company - responsible for the development of LCV products and related powertrains, destined for the Indian and identified emerging markets. This JV company will be owned 50:50 by the two partners. The products developed will be sold under both the Ashok Leyland and Nissan brands.
In addition, the two partners are also studying cooperation in the area of sales and distribution. This includes providing access for Nissan to Ashok Leyland’s dealer network in India and for Ashok Leyland to use Nissan dealer networks in identified export markets outside India.
Ashok Leyland has been consolidating its growth in Medium and Heavy Commercial Vehicles even while exploring suitable opportunities to expand the total product portfolio. This partnership with Nissan, renowned for their product engineering and a wide range of LCV products, will allow Ashok Leyland to expand into the fast growing LCV segments in India. We look forward to harvest the full potential of the two organizations.—R Seshasayee, Managing Director of Ashok Leyland
Our LCV business and overall expansion into India represents two of the biggest growth opportunities for Nissan in the medium and long term. Following previous announcements relating to expanding our passenger car business in India, this latest investment will broaden our coverage of this market in addition to providing new LCV products for emerging markets. In this regard, we very much look forward to the partnership with Ashok Leyland.—Carlos Ghosn, Nissan President and CEO
Following the signing of the HoA, both companies will now embark on a detailed feasibility study covering all proposed areas of cooperation. This study will lead to the signing of a Memorandum of Understanding and the subsequent formation of the legal partnership. This study is expected to conclude by October 2007.