Renault, Nissan ink MoU with Tamil Nadu Govt for setting up $1.1 billion assembly plant

Both the parties will have equal shareholding in the Rs.4500 crore-JV that will see the assembly plant roll out 400,000 vehicles a year under both the brand names - Renault and Nissan.

The production at the integrated greenfield automotive facility is expected to commence in 2010.

The plant that will cater to both Indian as well as foreign markets, will be situated on 670 acres of land and will include a powertrain facility, Renault and Nissan said.

The facility is expected to employ around 4000 people and will boast of a common powertrain and stamping facilities while body, paint and trimming would be unique to each of the two manufacturers.

"It is a major investment by Nissan into India, next to China. Nissan will like this project to be a world class one and wants it to be Nissan's export hub," Colin Dodge, senior vice-president of Nissan Motor, said.

"Truly this plant in India would be a global business hub for Nissan," Carlos Tavares, executive vice-president, Nissan Motor said.

"India, one of the fastest-growing car Markets and one of the most competitive supply bases in the world, will play a key role in Renault's growing global presence. With the Chennai plant, Renault wants to build a full lineup for India, following the current success of Logan. In addition, we are also talking to Bajaj Auto for the small-car project," Patrick Pelata, executive vice-president, Renault, said.

Originally, the plant was to be set up with Mahindra & Mahindra, the local partner of Renault and Nissan, but Mahindra & Mahindra withdrew from the project after the alliance's decision to make a car costing less than $3,000 with motorbike maker Bajaj Auto.

According to market observers, Mahindra & Mahindra pulled out of the deal as it felt the

Chennai plans of the alliance would not fit with its own plans of expansion. However, Mahindra & Mahindra continues to be a partner of Renault for the no-frills Logan in India since May 2007.

Nissan is also partnering with India's leading bus and truck maker Ashok Leyland Ltd that will see about $500 million being invested in three joint ventures in India for light commercial vehicles, engines and other components.

Renault has a 44 percent stake in Nissan and their alliance is the No.3 automaker in the world after General Motors and Toyota Motor.

India sells 1.4 million four-wheelers compared to 5 million in China and over 10 million in the US. Annual passenger vehicle sales in India are forecast to nearly double to 2 million units by 2010 and analysts say Indian car sales would more than quadruple to $145 billion by 2016.

In India, Renault and Nissan compete with market leaders Maruti Suzuki, Hyundai Motors and Tata Motor.