Maruti to supply 35,000 A-Star to Nissan

The country's largest carmaker, Maruti Suzuki India (MSI), today said that Japanese auto giant Nissan has placed orders for 35,000 units of its small car A-Star for 2010-11 to sell in the European market.

"As of now, we have a contract for three years and they (Nissan) have agreed to buy 35,000 units from us annually. It will be 35,000 units which could be revised upward depending on the demand and market situation," MSI Chairman R C Bhargava told reporters on the sidelines of Hero Group's Mindmine Summit here.

He said that in the current fiscal Nissan had revised its orders upward to 54,000 units, from the earlier 35,000 units.

Nissan sources the A-Star from MSI's Manesar facility and sells it in the European market as 'Pixo'.

A senior Nissan official had said during the Geneva Auto Expo earlier this month that it may review the relationship after 2013, on the backdrop of Volkswagen Group picking up a 20 per cent stake in MSI mother company Suzuki.

Bhargava said that MSI's export during the next fiscal are likely to be flat due to demand slowdown in Europe. The company is expected to close the current fiscal with an export of 1.5 lakh units.

"We will, however, try to make up for the lesser demand in Europe by concentrating in other markets like Indonesia and the Middle East," Bhargava said.

Asked about the costs likely to be incurred by MSI for replacing the faulty gaskets in 1 lakh A-Stars recalled last month, Bhargava said: "The total cost will be Rs 32 crore and in that our share will be 40 per cent, while the vendor will pay the remaining amount."

The company had recalled 1 lakh units of the A-Star due to fault in component part, in what became the biggest ever recall to date in the history of Indian auto industry.