Manufacturing India-III

Auto Sector Provides Lead

For all the developed countries, be it Germany, US, or UK, the automobiles led the industrial development. It happened in the same way for Japan as well as South Korea. It is happening in China and India too.

Last Monday, some great news about the Indian manufacturing sector came simultaneously from three centers- Pune, Chennai, and New Delhi. It all related to automobile sector.

In Chennai, Ashok Leyland (ALL) signed agreement with Nissan for 3 ventures. In Pune, Carlos Ghosn and Rajiv Bajaj agreed to work for a $2500 car together. The old man of Suzuki Motor Co, president and CEO Osamu Suzuki announced a management change and also an investment of $1.8 billion for setting up a research and development unit at Manesar in New Delhi. Till very recently, Suzuki was not ready to get its transmissions manufactured in India and was importing it for all its vehicles.

R Seshasayee, MD of ALL and Carlos Ghosn, CEO of Nissan signed an MoU to foray into the manufacture of light commercial vehicles (LCVs) with an initial investment of $500 million under three different JVs: one each for vehicle manufacturing, power train manufacturing and R&D.

In the manufacturing JV, ALL will hold 51% while Nissan the rest. The plant with a production capacity of one lakh units a year will be located in India in one of the three states- Tamil Nadu, Andhra Pradesh and Uttarakhand. Production will start in 2010 and will include the Nissan Atlas F24 light duty trucks in addition to the range of products covering applications from 2.5 to 8.0 tonne gross vehicle weight.

The second joint venture will be for manufacture and assembly of engines and other drive train components to be fitted in the LCV and for exports with manufacturing facility located in India. Nissan will hold 51% while ALL will hold the rest.

The third is a technology development company headquartered in Chennai in which both parties hold equal stakes. The products developed and made would be sold under both Nissan and ALL badges.

In Pune, Carlos Ghosn, CEO of Renault and Nissan visited the Bajaj Auto’s 198-acre two-wheeler manufacturing facility at Chakan, near Pune, on Monday afternoon to announce the collaboration of both Renault and Nissan with BAL for making and selling an ultra low cost car (ULC) priced at around $2,500. “If Tatas can do it, there is no reason Bajaj cannot with the help of Renault and Nissan,” said Ghosn. Bajaj would lead the tripartite tie-up, while the two global automakers support the venture in design, engineering and even equity participation in the project if needed. The idea is to build a car of robust quality that meets the basic requirement of the customers in India initially and then see if it can be exported to other markets. In a few months when the feasibility study will be completed, and if the report is favourable, then the company can launch the ULC car by end 2011.

The old man of Suzuki Motor Co, president and CEO Osamu Suzuki who brought automobile to India in real big way was also in New Delhi. Shinzo Nakanishi, currently the chairman of MSIL will be replacing Jagdish Khattar. Mariuti Suzuki announced plans to invest $1.8 billion for setting up a research and development unit at Manesar, as well as marketing and production expansion. The company already has a production unit in Manesar. The R&D facility would be set up in an area of 500 acre.

Both Carlos and Suzuki are now ready to use the Indian talent for product innovation as other MNCs in IT sector are doing. GM is already having its R&D facility in India. According to Karl Slym, the new president and MD of General Motors India, the company is evaluating the possibility of setting up an engine manufacturing facility in India to cater to domestic as well as export demands. Automobile major General Motors expects to source components worth $1 billion from India for its worldwide operations in the next two to three years.

It is obvious, automobile will lead the manufacturing sector in India too.Tata Motors has been able to provide the benchmarks of Rs 1-lakh car and ACE truck to even the global players.

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