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Nissan exit shouldn’t affect ALL

Nissan exit shouldn’t affect ALL

 

The southern engineering giant Ashok Leyland Ltd (ALL) has opted to terminate its  partnership agreement with the Japanese Nissan Motor Company. A part of the Hinduja Group, ALL has opted to buy all the shares of Nissan: in the three joint venture companies that were set up in 2008. The three JVs were: Ashok Leyland Nissan Vehicles Pvt Ltd, for the manufacture of vehicles, Nissan Ashok Leyland Powertrain Pvt Ltd for the manufacture of power trains and Nissan Ashok Leyland Technologies Pvt Ltd for technology partnership. The companies were equal partners.

 

 Ashok Leyland was set up in 1955 in collaboration with British Leyland with the latter having majority stake. Over the initial two decades ALL focused on medium and heavy commercial vehicles with progressive indigenisation. The Hindujas acquired the British interest and took charge in 1987. At the time of acquisition they also invited Iveco, Italy, as a partner with 10 per cent stake. This was a major attempt to induct state-of-the-art technology. The Hindujas, at that time, announced that they will endeavour to produce commercial vehicles capable of being exported to developed countries. Till then their focus was on indigenous technology appropriate for India and other developing countries.

 

 The collaboration with Iveco did not last long and was terminated. Unlike competitor Tata Motors, in-house R&D was also weak until the end of the 1990s. But in the new millennium a strong focus was made on R&D. A handsome step up of R&D spend was made and scientists and engineers in hundreds were assembled. Then MD, R Seshasayee, Dr V Sumantran (ex General Motors and R&D leader who was also instrumental in Tata Motors engineering its passenger cars) and Vinod Dasari, embarked on catching up with technology. Apart from the three joint ventures with Nissan, ALL made extensive forays into technology, acquisitions/partnerships in Europe. These included: KMW, German manufacturer of defence equipment, Avia Ashok Leyland Motors (AALM), Prague, Alteams Group, Finland, Optare plc, Continental AG, Albonair GmbH, Defiance Technologies...

 

 The in-house R&D strengths built, combined with the exposure to technology developments in Europe and the US, should help ALL strive for engineering excellence on its own.

 

 The boom enjoyed by the economy from 2004 and the handsome growth recorded by the vehicle and construction sectors, the Hindujas expanded these collaborations which included a joint venture with the American construction equipment giant, John Deere.

 

 But the slowdown of the economy post 2008-09 impacted severely on the growth plans. The John Deere collaboration had been terminated earlier and the more recent one relates to the Ashok Leyland-Nissan JVs.

 

 In recent months the commercial vehicle sector has been recording handsome growth. With  the recent plans of the Central government to phase out old vehicles aged 10 years and more, the market looks promising. However, with the entry of other large players like Daimler, competition is bound to intensify.

 

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