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Tokyo, Chennai : Nissan Motor, Japan's third-largest automaker, and its affiliate Renault will build a Rs45 billion rupee ($1.1 billion) plant in India to gain access to one of the world's fastest-growing passenger car markets.
The automobile companies have reached an agreement with the southern Indian state of Tamil Nadu on the project, they said yesterday in a joint release in Chennai, the state's capital. The plant will have a capacity of 400,000 cars a year.
The factory will also help the companies, which will have equal stakes in the project, to ship cars to overseas markets. "We see India as another export base," Nissan's Executive Vice President Carlos Tavares said in the release.
The announcement comes a month after Mahindra & Mahindra Ltd., India's largest sport-utility vehicle maker, pulled out of a venture with Renault and Nissan, leaving them without a local partner.
The automakers are looking for sales growth in emerging markets to make up for stagnating demand in their home countries, and the dollar's decline against the yen, which undermines the value of Nissan's North American earnings.
The India car plant will make its first car by 2010 and will manufacture four models, Nissan spokeswoman Pauline Kee said in an interview in Chennai yesterday.
Mahindra, Renault and Nissan said last year they propose to jointly build a factory by 2009 and reach annual capacity of 400,000 vehicles in seven years. The project included a powertrain plant for the French and Japanese carmakers.
Renault and Nissan will proceed with building an ultra low- cost car to rival the Nano unveiled by India's Tata Motors Ltd, Chief Executive Officer Carlos Ghosn, who heads the second- largest French carmaker and Tokyo-based Nissan, said in an interview in Davos last month.
The Nano, which Tata plans to price at about $2,500, may upstage Renault's no-frills Logan, which costs buyers about four times as much.
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