Nissan Ashok Leyland kick started their partnership in 2007-08 to explore promising light commercial vehicle segments in India that are new to both entities. The partnership involves Ashok Leyland Nissan Vehicles Ltd (manufacturing), Nissan Ashok Leyland Powertrain Ltd and Nissan Ashok Leyland Technologies Ltd (R&D). The Indian CV major holds 51% stake in the first JV and its Japanese partner owns rest of 49%. The arrangement is opposite for the second JV while the third one is a 50:50 organization.Nissan Ashok Leyland’s only ray of hope is the Dost which has just surpassed 1 lakh sales milestone.
After an strong start, the performance of all the three JVs gradually started losing shine. The starting point of trouble was said to be the mounting losses of Ashok Leyland Nissan Vehicles Ltd. In 2014-15 fiscal, the company reported a loss of INR 791 crores which is 4.5 times higher than the previous fiscal. This has forced Ashok Leyland to have an impairment provision of INR 214 crore out of net investment of INR 509 crore across all the three companies.
Save for the Ashok Leyland Dost LCV, none of the other JV products really took off. Nissan Evalia and Ashok Leyland Stile which are based on Nissan’s NV200 global platform consumed a major portion of investment but none of them clicked in their respective markets. Ashok Leyland withdrew Stile owing to its poor response and it’s said that production of Evalia has been ceased as well. Several hundred units of these models are reportedly lying in stockyard. Ashok Leyland Partner and Mitr also failed to bring in the much needed sales volumes.Neither Nissan Evalia nor its commercial sector cousin Ashok Leyland Stile managed to cracked their respective markets, leading to huge losses.
Economic Times reports that there has been a severe pruning of workforce which resulted in delayed or shelved projects across all the three companies, indicating that the partnership could face the end of road in about a year. If the recent restructuring of workforce (several top officials were reportedly transferred to Ashok Leyland’s payroll) is anything to go by, final outcome could be one of the partners buying out of the other.
Renault Nissan Alliance’s track record of partnerships with Indian firms has not been a reassuring one. The Mahindra Renault association for Logan (Verito) and Renault-Bajaj association for a proposed low-cost city car didn’t work out and it seems the Nissan Ashok Leyland partnership is also facing a similar outcome.
Via – EconomicTimes.com