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Nissan exit shouldn’t affect ALL

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- 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.

Ashok Leyland was set up in a 1955 collaboration with British Leyland, with the latter having the 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 inducted Iveco, Italy, as a partner with a 10 per cent stake. This was a major attempt to induct state-of-the-art techno-logy. The Hindujas announced that they would endeavour to produce commercial vehicles capable of being exported to G8 countries. Till then ALL’s focus was on indigenous technology appropriate for India and other developing countries.

The collaboration with Iveco did not last long. 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...

With the boom in the economy from 2004 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 severely impacted the company’s growth plans. The John Deere collaboration was terminated 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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