The Hindu Business Line : Nissan to tap Maruti facilities

MR JAGDISH KHATTAR, Managing Director, Maruti Udyog Ltd, and the Joint Managing Director, Mr Hirofumi Nagao, addressing a press conference in the Capital on Friday. - Kamal Narang

New Delhi , June 2

Japanese carmaker Nissan Motor Co is set to gain a foothold in India by sharing manufacturing facilities with Suzuki Motor Corp, the parent company of Maruti Udyog. "Nissan and Suzuki will start a manufacturing collaboration in new emerging markets by sharing their respective manufacturing facilities. This activity will start at Suzuki's plant in India,'' a joint statement by the companies said.

Under the agreement, Nissan would utilise Maruti's production facilities to manufacture cars.

Speaking to Business Line from Japan, Mr Simon Sproule, Corporate Vice-President, Nissan Motor Co Ltd, said that in the first stage Nissan would seek to manufacture one car from its portfolio in India, which would be sold under the Nissan brand.

"It is too early to talk about which models Nissan would be looking to bring in. But we see India as a market with great potential for Nissan products," he said, adding that Nissan is likely to sell its vehicle by developing/expanding its own dealership network in India.

Mr Sproule further pointed out that the partnership between Suzuki and Nissan in India could be similar to the one the two companies have in Thailand, where Suzuki uses Nissan's facilities to manufacture its models. Nissan now sells only the X-Trail in India, which it imports through the CBU route.

Analysts point out that with the new arrangement Nissan will now be able to introduce a "volume car" at a competitive price from its stable.

Further expansion

Meanwhile, the Maruti Udyog Managing Director, Mr Jagdish Khattar, on Friday said the business collaboration between Suzuki and Nissan has a positive implication for the company and its stakeholders. The development could mean further expansion at Maruti's facilities than earlier planned.

Maruti is setting up a new plant in Manesar with an initial capacity of 100,000, which will go up to 250,000 cars per year by 2009. The company's existing unit has a capacity of 600,000 units. "The excise cuts on small cars and their increasing sales volumes have helped us to reduce costs and improve productivity, which in turn is now allowing us to contract manufacture for other vehicle manufacturers," Mr Khattar said.

Advantage automakers

Meanwhile, analysts point out that the tie-up could also see global automakers taking advantage of their alliances in India. Interestingly, Nissan is 44.3 per cent held by France's Renault, which in turn has entered into a venture with Mahindra & Mahindra to produce the Logan in India from 2007. Further, Maruti is setting up a diesel engine plant where it would make a 1.3-litre engine with technology procured from Fiat. Maruti could supply these engines to other players in India including Nissan and the Fiat-Tata combine.

When asked if the company would be looking to supply engines to players such as General Motors and Nissan, Mr Hirofumi Nagao, JMD, Maruti, said that the company was open to these options. Maruti share prices jumped by 12.86 per cent on the Bombay Stock Exchange today to close at Rs 769.40.

In addition to India, Nissan and Suzuki also announced in Tokyo that they had agreed to expand the scope of their business collaboration in various markets.

The two companies said from the end of this year, Nissan will supply a mini-van to Suzuki, while Suzuki will supply another mini-vehicle to Nissan in the Japanese market. Further, Nissan will supply a compact pick-up truck to Suzuki from 2008 for sale in North America, while Suzuki would provide a new A-segment vehicle for Nissan for sale in Europe.

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