Update: Nissan set to join Renault-Mahindra JV

Rex Mathew
22 January 2007

Nissan Motor is all set to join the Renault - Mahindra alliance to build a new 5-lakh unit per annum car plant in India, according to reports in the Japanese media.

Other reports today had indicated that Nissan is unlikely to build an independent plant of its own in India, contrary to earlier reports of the company considering a $500 million 2-lakh unit plant to manufacture small cars.

Renault and M&M had announced a new venture last year to set up a new auto plant to manufacture up to 5-lakh units. The plant would reach full capacity in five years and is expected to cost around $1 billion. Though conceived as an equal JV between M&M and Renault, senior Renault officials did not rule out the possibility of Nissan joining the venture at the time of announcement.

The proposed M&M-Renault plant would manufacture both Mahindra and Renault vehicles. The partners are also planning engine and transmission plants at an as yet unidentified site. Mahindra and Renault are preparing to launch the low-priced Logan sedan through a separate 51:49 JV.

Analysts believe that Nissan may be wary of investing in a separate plant when a lot of additional capacity is coming up in India. Most automakers are working on or are planning new assembly lines, apart from the M&M-Renault JV, which would be largest among new plants under consideration. Maruti has almost completed its new plant while Hyundai has announced a second plant in Chennai. General Motors has started work on a small car plant in Maharashtra while the Ranjangaon facility of Fiat-Tata Motors JV would reach full capacity in a couple of years.

Among other Japanese auto companies, Toyota is also planning a foray into the Indian small car segment. The company is reportedly developing a small car with a 1 litre engine for emerging markets.