The Financial Express

Nissan Motor to decide on India factory soon
 

Sept 13, 2006

    Nissan Motor Co, Japan’s second-largest carmaker, said it will decide within two months whether to build a new factory with Suzuki Motor Corp in India.

    “We are in negotiations right now,” Takeshi Isayama, vice chairman at Nissan, told journalists in Yokohama on Wednesday. “Our decision will be within a month or two.”

    Nissan and Suzuki will invest $1.5 billion to set up a factory in India, which will be ready in 2008, Surojit Mitra, India’s joint secretary in the ministry of heavy industries, said last week. Nissan and Suzuki are working together in emerging markets, including India, to expand the number of vehicles they sell while holding down development costs.

    “It makes sense for Nissan to have additional plans to expand in India since it is a growing market,” said Koji Endo, a senior analyst at Credit Suisse in Tokyo. “The $1.5 billion figure seems a bit too much for a factory,” he added. Nissan would probably spend between 20 billion ($170 million) and 30 billion yen if it built a factory in India, Endo said.

    Suzuki agreed in June to build a new small car model in India for Nissan starting at the end of 2008. Suzuki plans to build 2,00,000 small cars a year, half of which will be exported to Europe and sold under the Nissan and Suzuki brands. Suzuki may build an additional model for Nissan, Isayama said.

    Nisan considered making vehicles in India with Mahindra & Mahindra Ltd, Renault SA’s partner in the country, before it opted to work with Suzuki, Itaru Koeda, co-chairman at Nissan, told journalists on Wednesday. Suzuki was “the best solution,” he said. Nissan shares rose 0.6% to 1,291 yen in Tokyo. Shares of Suzuki gained 0.5% to 2,895 yen.

    Suzuki, Japan’s largest minicar maker and Maruti Udyog Ltd have raised their investment plans in India to expand capacity and make the South Asian nation an export hub.  

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