India's dream of becoming a production hub for small cars took a giant leap on Friday when it was announced that Maruti Udyog Ltd, a subsidiary of Suzuki Motor Corporation, will make Nissan cars in the country. This is an outcome of the global alliance between Japanese car majors Suzuki and Nissan.
"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 release issued by Nissan said.
Details of the deal are being worked out. Nissan will use the model rolling out of Maruti's facilities to foray into the high-volume segment of the Indian market. Nissan currently has only the X-Trail in India, a premium SUV it retails from four outlets in the country.
The timeline for the deal is not known yet. However, Maruti Udyog Managing Director Jagdish Khattar said at a media conference here that there were enough indications to believe that the Nissan cars might roll out in 2008.
He further said that Maruti would have to start thinking of expanding its facilities to accommodate the demand created by this deal.
The media conference was organised by Maruti, in which Nissan executives were not present. "The details are being worked out. But it is clear that it will have a positive impact on Maruti. The Finance Minister (P Chidambaram) had said in the Budget speech that India can be a export hub for small cars. Today's development is a significant step (in that direction)," he said.
Commenting on the development, an analyst from SSKI Securities said, "Currently, Nissan sells the Suzuki's MR Wagon as the Mono minicar in Japan. Maruti Udyog is also planning to launch a new platform rechristened the MR Wagon towards the end of this year. It is possible that Nissan could look at sourcing this model from Maruti Udyog or other models as the case may be."
What is also clear is that Maruti will not sell Nissan cars in India. "I don't think that is part of the deal," said Khattar.
This view was endorsed by Nissan Motor India's Managing Director Yoshi Moto Hiro. Speaking from Tokyo, she said Nissan would develop its own dealer network in India to sell its volume-generating model.
"All details of this deal from the India point of view are being worked out," she said. Nissan does not manufacture small cars anywhere in the world. The current deal with small-car major Suzuki aims to bridge this gap.
The release from Nissan further said that starting from the end of 2006, Nissan would supply a minivan to Suzuki on original equipment manufacturing (OEM) basis and Suzuki would supply a mini-vehicle to Nissan on OEM basis.
From 2008, Nissan would supply a compact pick-up truck to Suzuki on OEM basis, for sale mainly in North America.