Nissan And Renault To Build New Plant In India

Plant will have capacity of 400,000 annually.

Nissan on Feb. 26 tied up with French partner Renault's Indian venture to build a $902 million plant, joining a race with rivals Toyota and Honda for a slice of the South Asian nation's expanding car market. Indian partner Mahindra and Mahindra will control 50% of the venture, with Nissan and Renault sharing the remainder, the three companies said in a joint statement.

Nissan joined the alliance to "gain a rapid entry advantage for local manufacturing in India," said Carlos Tavares, executive vice president of Nissan.

The southern city of Chennai, known as India's Detroit, was chosen as the site of the factory, which will have the capacity to turn out 400,000 cars a year seven years after the start of production in 2009. The 400-hectare (925-acre) plant will provide auto production capacity for each partner, enable the rollout of both cars and sports utility vehicles and include a powertrain facility for Renault and Nissan. A range of automobiles tailored to the Indian market will be built under the alliance, which will enable Mahindra to move into passenger cars from utility vehicles.

Chennai's choice as the location of the new plant strengthens its position as the hub of car and car parts manufacturing in India. The city already hosts Ford and Hyundai, and has been chosen by BMW to locate a plant. The new plant will likely boost the car parts industry, with about 100 billion rupees of investment expected.

Nissan and Renault are latecomers to the Indian car market, which is forecast to expand 10% a year to reach two million units in 2010 as an economy expanding 9% a year boosts the buying power of consumers in the world's second-most populous nation. The Indian car market expanded by 68% between 1998 and 2003 to reach 1.04 million vehicles in 2004, according to Renault.

Honda is already selling its City and Civic models in the country and Toyota's local range includes the Innova and Corolla. Another Japanese rival Suzuki's local venture is India's biggest carmaker, with a market share of about 45%.

Copyright Agence France-Presse, 2007

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