Ashok Leyland acquires full ownership of three LCV JVs from Nissan

Ashok Leyland has announced it has completed the acquisition of Nissan Motor Co’s stake in each of the three joint ventures (JVs) formed between the two companies – Ashok Leyland Nissan-Vehicles, Nissan-Ashok Leyland Powertrain and Nissan-Ashok Leyland Technologies.

The original agreement for the three JVs was signed on May 26, 2008, for vehicle manufacturing, powertrain manufacturing and technology development. This followed the signing of the Master Co-Operation Agreement (MCA) between the two companies in October 2007. The shareholding structure of the three JVs was:

Ashok Leyland Nissan Vehicles: the vehicle manufacturing company owned 51% by Ashok Leyland and 49% by Nissan;

Nissan Ashok Leyland Powertrain: the powertrain manufacturing company owned 51% by Nissan and 49% by Ashok Leyland;

Nissan Ashok Leyland Technologies: the technology development company owned 50:50 by the two partners.

Under the terms of the MCA, one JV would manufacture LCVs and the another passenger vehicles, each badged and market-segmented differently – the Stile for taxi and fleet operators and the Evalia for passenger vehicle buyers.

At the time of its launch, the Ashok Leyland Stile, which was squarely targeted at fleet operators, was up against competition in the form of the Chevrolet Enjoy, the Mahindra Xylo and the king of the MPV segment, the Toyota Innova. The Stile failed to gain any traction whatsoever in the domestic market, selling just 1,121 units from October 2013 till March 2015. In May 2015, production of the vehicle was stopped.

For Nissan, the Evalia which was launched a year before the Stile, has performed well below expectations – from October 2012 till April 2016, sales have totaled 2,646 units. 

While other products like the Dost small commercial vehicle and the Partner have fetched good sales for Ashok Leyland, the Ashok Leyland-Nissan MPVs' poor market performance got the two partners to rejig the MCA.

On September 7, 2016, Ashok Leyland and Nissan had announced that they had reached a new arrangement in which Nissan would transfer its ownership in the three JVs to Ashok Leyland subject to statutory approvals.

Commenting on the development, Vinod K Dasari, CEO and managing director, Ashok Leyland, said: “This is an important milestone in the history of Ashok Leyland. We are very positive on the future of the LCV business which is growing.  While we have acquired 100 percent ownership of the JVs, we will continue to be associated with Nissan for the technology of the existing Dost, Partner, and Mitr models. These are very important products for us and hold tremendous potential both within and outside India.  Our association with Nissan continues in a new relationship.”

Under the new arrangement, Ashok Leyland will continue to build – under a licensing agreement – the Dost, Mitr, and Partner light commercial vehicles, which are based on Nissan’s design, engineering and technology. Servicing and parts availability for customers will be ensured by a technical support arrangement. Additionally, the two companies have agreed to continue a deal to procure made-in-India parts to Nissan.

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