Ashok Leyland and Nissan Joint Venture reaches climax as both parties could agree with a mutual termination of the contract very soon
The partnership between Indian commercial vehicle giant Ashok Leyland and Japanese auto maker Nissan is at the tipping point as both parties are at the verge of terminating the contract. Nissan has taken its contemporary to the court fuelling the quarrel between each other; much like Ashok Leyland decided to approach court floors over a dispute in the joint venture last week.
The unsettling combo never got off to the start they intended to since the very beginning and the plummeting sales figures have created a hostile atmosphere between the two companies. The synergic collaboration was penned back in 2007 to take advantage of utilising the manufacturing facilities in Chennai.
The three JV companies originated from the agreement were Ashok Leyland Nissan Vehicles Pvt. Ltd, Nissan Ashok Leyland Powertrain Pvt. Ltd and Nissan Ashok Leyland Technologies Pvt. Ltd. Targeting at the 2.5-7.5 tonne LCV segments, the vehicles rolled off the production lines were Ashok Leyland Dost LCV, Ashok Leyland Stile van and the Nissan Evalia MPV.
Though the Dost endured moderate sales, the sub-standard Stile and Evalia flunked in garnering customers. With the growing tautness between the two firms, Ashok Leyland shook the auto industry last week by taking Nissan to the court as it alleged the latter of violating the joint venture agreement.
Ashok Leyland Pvt Ltd owned by Hinduja Group claimed that the Japanese brand uses machines and tools in the JV to manufacture passenger cars instead of Light Commercial Vehicles. It went on to say those equipment at the Renault-Nissan production facility in Oragadam Chennai are owned by the Indian firm which Nissan comprehensively dismissed.
Consequently, the Indian arm of Nissan issued a termination notice to Ashok Leyland in less than a week alleging that in the Nissan Ashok Leyland Technologies Pvt Ltd, owned equally by both parties, the Indian commercial vehicle stalwart detained a payment of Rs. 2.3 crore. Thwarted by the long-standing issues and accumulated losses in the years went past, both the brands are expected to settle dispute by consenting a mutual termination of deal quite soon.
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