Ashok Leyland and Nissan Motor on Monday said they had agreed to form three light commercial vehicle (LCV) joint ventures. companies supporting the (LCV) business. The agreement was signed in Chennai.

The partnership will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

The two companies expect to spend about $US500m to establish the three JVs. These will be a vehicle manufacturing company with exclusive rights to manufacture LCV products in India for both the partners.

Manufacturing facilities will be located in India and the company will be owned 51% by Ashok Leyland and 49% by Nissan. Production will start in 2010 and will include the new Nissan Atlas F24 light-duty truck, in addition to a range of products covering applications from 2.5 to 8 tons gross vehicle weight (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to grow beyond 100,000 units annually.

A powertrain manufacturing company will manufacture and assemble engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing will be located in India and the company will be owned 51% by Nissan and 49% by Ashok Leyland.

The technology development company  will develop LCV products and related powertrains for the Indian and some export markets. This JV will be owned 50:50 by the two partners and located in Chennai. The products developed will be sold under both the Ashok Leyland and Nissan brands.

The two partners will also share dealer networks in specific markets. This could provide Nissan with access to Ashok Leyland's dealers in India and for Ashok Leyland, access to Nissan dealer networks in specific export markets.

Nissan has a similar arrangement for commercial vehicle models with Volvo in some markets.

Nissan and Ashok Leyland said the JV would "benefit from leveraging the sourcing strengths of both the partners".

Ashok Leyland managing director R Seshasayee added: "An effective entry into the LCV segment has been on Ashok Leyland's radar for some time now. This partnership with Nissan will allow both companies to develop a range of cost-competitive and customer-oriented LCVs targeted not only to the Indian market but several select markets overseas."

Nissan president and CEO Carlos Ghosn said: "The LCV business is one of Nissan's most important global growth engines. This agreement accelerates our LCV business in India and lays the foundation for further growth through exports. We see India emerging as an important hub in Nissan's global LCV manufacturing footprint."

Ashok Leyland is the flagship company in the Hinduja Group, a multi-billion dollar global investment and banking firm, and already a leading manufacturer of commercial vehicles in India.

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