The 50:50 JV sees the two carmakers committed to investing a minimum of Rs 4,500 crore for an installed capacity of 400,000 vehicles per annum. Production is expected to start in the beginning of 2010. The project, a 670-acre state-of-the-art industrial complex, will produce vehicles for each company, plus house a powertrain facility. The partners will optimise production costs through economies of scale helped by joint investment in plant and infrastructure, as well as purchasing synergies. The new facility would provide employment to about 4,000 people. Both companies have plans to make compact cars, aiming at getting larger volumes.

A year ago, the two carmakers along with Mahindra & Mahindra had announced a tripartite JV but recently the Indian partner pulled out to focus more on its own product lines.

According to Carlos Tavares, executive vice-president of Nissan, the carmaker would make four models in the new plant and distribute them through a planned JV distribution company. "We are eager to build and deliver products that meet the needs of the Indian market. We also see India as an export base that will allow Nissan to be competitive in the global supply chain network," he said. Meanwhile, Renault plans to make five models in the Chennai plant and distribute them through its JV with M&M – Mahindra Renault India Ltd which makes the Logan. Fifteen percent of the production will be exported.

According to Patrick Pelata, executive vice- president (Product & Strategic Planning and Programmes) – Renault Group, “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.”