Nissan may set up new plant for small car

Japan's Nissan Motors may set up a new plant in India to manufacture an entry-level car that it plans to roll out at the Rs 2.5 lakh price point through a joint venture. 

Kiminobu Tokuyama, MD and CEO of Nissan India, said the company expected "very large" volumes from the new car that would be pitched in the Maruti Alto category. Hinduja group company Ashok Leyland, Nissan's India partner for light commercial vehicles, is one of the companies the Japanese auto major is in talks for the JV. 

Tokuyama refused to identify the other companies Nissan was talking to and said "details are being worked on." 

Nissan has multiple partnerships in India and will launch the Micra compact from its Chennai factory in July. While it has partnered group company Renault for the manufacturing set-up at Chennai, it will sell cars in a marketing and distribution tie-up with Hover Automotive India. The company has also partnered Renault and Indian two-wheeler major Bajaj Auto for a ultra-low cost (ULC) car, while tieing up with Ashok Leyland for LCVs. 

The new entry-level car, that the company will position between its ULC and the Micra, will be yet another partnership for the company. Tokuyama said since the model would be in the heart of the Indian car market that accounts for the majority of sales, targeted volumes are likely to be substantial, thus requiring a new manufacturing facility. 

"A different manufacturing base for this is one of the alternatives," he said, indicating that the car may not be manufactured at its Chennai factory. "As we finalise our strategy for the entry-level car, we will work out the best options." Nissan-Renault's Chennai factory has annual capacity of 4 lakh unit that is expected to be used by both the companies equally for their products. Nissan plans to use the location for making the Micra compact; a new sedan that it plans to roll in by 2011; a multi-purpose vehicle; LCV and one more model. 

Hover is expanding the retail network as Nissan expands its portfolio. It has ten dealerships and hopes to expand this to 80 by 2013, by when it hopes to have a 9 models, including 4 imported.