Nissan to team up with Mahindra-Renault

Nissan seems to have abandoned its plans of going solo in India, and has reinforced its decision to team up with the Mahindra-Renault combine for manufacturing activities in India.

The trio is likely to make an announcement on the location of their new plant as early as February 2007. Sources close to the development said that the race is on between Maharashtra and Karnataka to host the highly-lucrative 8-lakh vehicles per year manufacturing facility.

Sources in the Maharashtra government have confirmed that they have had two rounds of talks with the companies but the jury is still out on which state will bag the deal.

If Maharashtra succeeds, it will come as a major shot in the arm for the state, which has already bagged auto investments worth Rs 10,000 crore from manufacturers ranging from General Motors to Volkswagen, M&M, Tata-Fiat, DaimlerChrysler and Mico Bosch.

In November 2006, Nissan/Renault's top boss, Carlos Ghosn, announced the likelihood of a tripartite manufacturing joint venture between M&M and his companies. Nissan was to take a decision on the same in four months. But since then the Japanese car-maker has been doing constant flip-flops. Nissan even talked about setting up its own 200,000 unit manufacturing facility in India. Even before the idea of going with M&M and Renault was broached, Nissan opted out of a joint manufacturing project with Suzuki in India.

But now the company seems to be clear on manufacturing plans in India. Nissan chief operating officer Toshiyuki Shiga told Reuters on Monday that the three-way talks are proceeding "faster than expected", and any announcement "was likely to be made jointly by the three companies".

On the possibility of an independent plant, Reuters quotes Shiga as saying, "An independent plant is not under consideration right now."

Nissan currently sells only the imported X-Trail sport utility vehicle, which sold under 200 units last year, in India. India sells about one million cars per year. The company seems focused on the Indian market now and once the joint manufacturing plant is put in place it will have enough capacity to manufacture 300,000 cars a year. Nissan is also believed to be jointly developing a small car for the Indian market with its alliance partner Renault.

M&M's president automotive sector Pawan Goenka also confirmed that talks between the three companies were proceeding well and that an announcement was likely before March 9. But Mr Goenka refused to comment on which locations were under consideration for the joint manufacturing facility. Industry sources suggest that the chips are stacked in Maharashtra's favour considering M&M's long history in the state. M&M currently operates out of three manufacturing locations in the western state — Kandivili, Nashik and Igatpuri.

The company recently announced plans to locate its Rs 2,500 crore joint manufacturing facility for commercial vehicles with International Trucks and Engines in the Pune region. M&M's component arm is also investing around Rs 700 crore in the state to upgrade its existing facilities.