Ashok Leyland may get into car manufacturing with Nissan

Chennai, March 4 : Hinduja group company Ahok Leyland's possible foray into car making with Japanese Nissan Motor Company has kept the market and business circle abuzz here though officials decline to confirm or deny such a development.

"I am not commenting anything on the subject," V. Sumantran, executive vice chairman of Hinduja Automotive Ltd, told IANS.

Hinduja Automotive is the holding company of the group's stakes in auto companies.

Top officials of Ashok Leyland when contacted said only Hinduja group officials like Sumantran could clear the air.

Nissan Motor's Executive Vice President Colin Dodge told reporters in Geneva Tuesday that his company is in talks with Ashok Leyland to make a car costing below USD 5,000 (Rs.250,000).

With heavy vehicle maker Ashok Leyland signing with Nissan for light commercial vehicle (LCV) and with John Deere for earthmoving equipments, passenger car is the one obvious absence in its product line-up.

Industry officials say Nissan may find the Hinduja group attractive as the latter's flagship company Ashok Leyland has an existing vendor base as well as a network of six plants across the country.

In addition, group company Hinduja Foundries makes the castings for various kinds of automobiles.

In addition to the LCV joint venture with Ashok Leyland, Nissan has inked two more partnerships with the former - one for making engines and gear boxes for the LCV and another for research and development.

However, Dodge's announcement has raised many eyebrows in the automotive sector as Nissan is already involved in a couple of joint ventures in India.

Nissan has a joint venture with French car maker and associate company Renault to roll out cars near here. The plant will be commissioned this month. However, Renault has deferred further investments in the venture for the time being.

Nissan and Renault have also tied up with Bajaj Auto for development and manufacture of a low cost car.

Renault on its own has a joint venture with Mahindra that makes and sells the Logan car in India.

Some industry analysts say the big question is whether Ashok Leyland can pump in another mega investment as its capex plan for next two years is around Rs.2,000 crore.

Alternatively, the car project could be a separate company, possibly Hinduja Motors. Some time back the group has renamed foundry company Ennore Foundries into Hinduja Foundries.