Sunday, July 19, 2009

Nissan bets big on India for global operations

Japanese auto giant Nissan Motor Co is betting big on India not only for manufacturing cars for domestic and overseas markets but also for sourcing components for its global operations.

Nissan will be rolling out three different variants of its hatchback and sedan models, as well as a multipurpose vehicle (MPV), from five plants across the world, one of which is coming up at Oragadam, 55 km from here.

According to Nissan general manager (communications) Fernando Menezes, the company plans to have India as its global sourcing hub for components not only for those models but also for vehicles made elsewhere.

Menezes said Nissan is exploring what components could be sourced from India.

The other plants are located in Thailand and China while the locations of the remaining two are yet to be decided.

"The idea is to roll out one million vehicles, that is, 25 percent of the company's current annual sales, from the five plants," said Menezes.

"Sixty percent of the components that go into the three models are interchangeable providing a huge competitive component sourcing opportunity," Menezes told IANS.

All the three global models built on a single platform are expected to roll out of the Indian plant next May.

The company plans to ship out 110,000 units from the Indian plant from 2011 onwards and later increase the export to 180,000 units to more than 100 countries.

Under the single platform formula, the basic or core design and bulk of the components remain the same across several models, but changes are made in some areas to offer a differentiated product.

Automobile manufacturers the world over, including India's Tata Motors, have started following the single platform model to reduce design and manufacturing cost, said V.G. Ramakrishnan, senior director of Automotive and Transportation Practice at business research and consultancy Frost and Sullivan.

Citing the case of Tata Motors that launched Indica, Indigo and Indigo Marina built on the same platform, Ramakrishnan said: "The chassis and some other components may be tweaked based on the need."

Ford India's diesel Ikon is powered by the same engine that powered its Fiesta diesel, while Tata Motors' Indica Vista uses Fiat's engine.

Nissan's Menezes declined to spell out whether the three models will be powered by the same engine, saying: "The engine will depend on what an individual market demands. Other than the engine there are many parts in a vehicle that are interchangeable."

He said the proposed cars will be lighter and more fuel-efficient but will not have Nissan's newly developed fuel injection systems for small capacity petrol engines.

The hatchback that will be rolled out next May will replace Nissan's existing March (sometimes called Micra) model.

Referring to the upcoming plant in India, Menezes said 70 percent of the construction work has been completed.

A major chunk of the 350 billion yen ($3.72 billion) that Nissan will invest on expansion will be in its Indian plant owned by Renault Nissan Automotive India, a 50:50 joint venture the Japanse company has with French car maker Renault.

The joint venture was supposed to roll out 200,000 cars on an investment of Rs.4,500 crore by each partner.

Renault has suspended its Indian investment since then owing to the economic slowdown, but Nissan is going ahead with its India plans.

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