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ShareMumbai: The joint venture between Ashok Leyland and Nissan to produce light commercial vehicles will be, well, not so joint.
The venture, which is a maiden inning for both in India, has gone through its fair share of changes since announcement in 2007.
Besides a delay in production, the partners are now saying the products they will roll out together will have individual brands -- Nissan for Nissan, Ashok Leyland for Ashok Leyland.
The twain shall not meet, even at the distribution level. That sounds like a venture for facility sharing more than anything else. Kiminobu Tokuyama, managing director and CEO, Nissan Motor India, said, "We will sellNissan-branded LCVs through our own dealerships and Ashok Leyland will do the same through theirs. I don't think there will be cross-selling."
In an emailed response, an Ashok Leyland spokesperson said: "With a view to optimising investments, both partners have decided to utilise their existing footprint in the initial phase."
When the venture was formed two years ago, the partners were studying cooperation in sales and distribution, especially Nissan eyeing Leyland's network in India and Leyland Nissan's networks abroad.
Now, said the Leyland spokesperson, the partners have demarcated territories where they'll retail and not step on each other's toes.
But Tokuyama denied there is such a delineation: "We will sell in the same market as our partner as the two products that will be offered are distinct. Ashok Leyland will sell its unique LCV and so will we."
Beyond the foggy alliance, fact also is that if Nissan decides to sell through its own dealer network, it would mean setting up a network from scratch.
Nitish Tipnis, chief operating officer, Hover Automotive India, the Indian company which handles marketing, distribution and sales of Nissan's X-Trail utility vehicle and Teana premium car, indicated that "once the LCV project gains momentum, we are likely to have an entirely new channel for its distribution."
Setting up a dealership involves an investment cost ranging from Rs 5-12 lakh.
Since the Chennai facility is yet to come on stream, for the initial phase the LCVs of both the partners will manufacture from Ashok Leyland's facility in Ennore, Tamil Nadu.
This facility produces medium and heavy trucks, so it will see retooling to facilitate the production of LCVs. "We are in talks for investments needed to retool the facility," the Leyland spokesperson said.
Mahantesh Sabarad, senior research analyst with Centrum Broking, reads between the lines, saying the joint venture "seems to be in difficulty as no progress has been made".
"in the wake of the comments made by Carlos Ghosn, head of Renault and Nissan at the Tokyo Motor show last week, it appears that Nissan's foray into the Indian market will also be under review," Sabarad said. Nissan and Ashok Leyland have signed an MoU with the government of Tamil Nadu for setting up of an integrated facility for all the three units at Pillaipakkam, 40km off Chennai on a 380-acre plot.
Both firms had announced three joint ventures for making light commercial vehicles, powertrains and developing new technology, with an initial target to produce one lakh LCVs, at a total investment of Rs 2,300 crore.
