Ashok Leyland says No to Nissan for small cars

To focus on CVs; Nissan says it’s exploring other tie-ups in compact segment.

Hinduja-promoted Ashok Leyland, the country’s second biggest commercial vehicle (CV) maker, has aborted talks with Japan’s fourth largest auto maker, Nissan Motor Company, for a low-on-cost compact car.

Chennai-based Leyland has traditionally been a strong truck and bus making company. It was talking to Nissan earlier this year to build an entry-level car below the Nissan Micra, that would greatly support the Japanese company’s export ambitions from India.

At present, Nissan has only the Micra in this segment and is keen on additions, as India’s personal vehicle demand is dominated by compact cars to the extent of 70 per cent. Other markets like Europe are also moving to such cars.

Dheeraj Hinduja, the new chairman of Ashok Leyland, said in an interview to Business Standard, “The car project with Nissan is not happening. There is no progress with Nissan on it.”

Carlos Ghosn, chairman and chief executive of Renault-Nissan, had stated in March that Nissan was in similar talks with Chinese and Indonesian companies, apart from Ashok Leyland for the car, which could be sold for $5,000 (Rs 2.3 lakh).

The Chennai-based company presently wants to limit its focus to its commercial vehicle business, where it is undertaking several projects ranging from development of light to medium to heavy commercial units. This is being done through joint venture companies and in-house.

Hinduja added, “(The) Small car segment is much more challenging, especially the technology. If any partner brings in, we will look into it. For now, we are not discussing with Nissan for the project.”

Nissan
In a e-mail statement, Nissan said, “As we have mentioned earlier, Nissan is seriously exploring to expand its presence and offerings in the cost-centric segment of our industry. We are considering many options and discussing with several partners at this moment of time and nothing has been finalised. Since it’s in a very early stage, we cannot anticipate any final decision.”

Following Volkswagen’s entry into Suzuki last year, through a buy-out of nearly 20 per cent equity, questions have been raised on Maruti Suzuki’s car export relations with Nissan, under which Maruti makes and exports the A-star, rebadged for Nissan as the Pixo to the European market. Nissan sources more than 50,000 units of the Pixo from Maruti every year. With its withdrawal, Nissan would be left with just the Micra in European market, which could result in loss in substantial volumes.

Volkswagen, which does not have much presence in the cost-effective small car segment, is banking on Suzuki for the same. The German company is said to have outlined ‘dozens’ of projects with Suzuki, pertaining to a variety of areas, including small cars.

Meanwhile, Leyland said it was on track to launch light commercial vehicles for cargo and passenger applications under the Nissan joint venture programme, which it had signed in 2008. The first of such vehicles will hit the market in the second half of next year.

Nissan has also signed an agreement with two-wheeler major Bajaj Auto for a sub-Rs 2 lakh car but has restricted itself to just marketing initiatives. Nissan is supposed to market the car, which will debut in 2012, in India and abroad.