Nissan, Mahindra, Renault in India car venture

CHENNAI, India - Japan’s Nissan is to team up with Mahindra & Mahindra and Renault to invest in a $905 million car project in India, a latecomer to a market where annual passenger car sales are expected to double by 2010.

By (Reuters)

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Published: Mon 26 Feb 2007, 5:13 PM

Last updated: Sat 4 Apr 2015, 8:30 PM

Nissan Motor Co., Japan’s third-biggest automaker, Renault SA, which owns 44 percent of Nissan, and Indian tractor and utility vehicle maker Mahindra & Mahindra Ltd. will build a car factory in the southern city of Chennai with capacity to produce 400,000 units in seven years.

Production will start in the second half of 2009, the companies said in a joint statement on Monday, with output to rival cars produced by local market leader Maruti Udyog Ltd. BO , South Korea’s Hyundai Motor Co. and Tata Motors Ltd.

Renault already has a joint venture with Mahindra to make its no-frills Logan car at a factory in the western state of Maharashtra from this year.

Nissan’s executive vice-president Carlos Tavares said in a statement that Nissan had looked at several options for its first Indian manufacturing base but felt the advantages of working with Renault and Mahindra were ‘compelling’.

Nissan will market its products independently, while Renault will depend on a joint venture with Mahindra to sell its models.

The new project should provide a large sourcing operation for the Renault-Nissan alliance, while Mahindra will have access to its foreign partners’ wider distribution network, sources said last week.

The port city of Chennai is already home to car factories belonging to Hyundai, Ford Motor Co. and BMW AG

Pawan Goenka, president of Mahindra’s automotive unit, told reporters the new venture, in which his firm will own 50 percent, may expand depending on market conditions in Asia’s fourth-biggest economy.

Renault and Nissan did not say how they would split the rest of the venture. All three partners will have a significant part of the total capacity to produce their models.

Rival for Maruti?

Nissan will focus on compact cars -- the biggest market in India -- where Maruti, part of Japan’s Suzuki Motor Corp., dominates with models such as the Maruti-800 and Alto.

Renault officials said the French firm would initially stick to products under the Logan platform, but may expand that to include other models.

The new plant will also have a powertrain facility to supply the local market and may at some stage consider exports. Officials did not give details of the plant’s powertrain capacity.

Japan’s Toyota Motor Corp. plans to build a plant by 2010 near its unit in Bangalore, concentrating on cheaper, smaller cars, a newspaper reported earlier this month.

The facility will aim to produce 100,000 cars a year, roughly doubling the firm’s capacity in India, it said.

Tata has a deal with Italy’s Fiat SpA to build more than 100,000 cars and 200,000 engines and transmissions together in India from next year.

Nissan has a separate agreement under which Maruti is to build 50,000 compact cars under Nissan’s badge, mostly for export to Europe from 2008.

Mahindra also has a separate pact with US firm Navistar International to make trucks and buses in India this year.

Nissan shares closed up 1 percent, Renault was up 0.4 percent and Mahindra added 0.2 percent.

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