Truck and heavy vehicle maker Ashok Leyland, on Wednesday, said it has reached an understanding with Japan-based Nissan Motors to float three joint ventures (JV) to strengthen its light commercial vehicle business.
The two have signed a Heads of Agreement (HoA) and the first stage of the proposed partnerships would include developing, manufacturing and marketing of LCV products under both Ashok Leyland and Nissan brands. The three JVs would be  vehicle manufacturing, powertrain manufacturing and technology development companies, according to the company.
Non-binding pact
A Heads of Agreement is a non-binding document outlining the main issues relevant to a tentative partnership agreement. A Memorandum of Understanding (MoU) would be signed after the feasibility study by the two firms which is expected to be complete by October. The proposed vehicle manufacturing company, majority owned by Ashok Leyland, would have its production units in India with exclusive rights to make LCV products. In the medium term, annual production volume for Indian and export markets is expected to be above 1,00,000 units from this company.
Powertrain Manufacturing company, majority-owned by Nissan Motors, would focus on the manufacture and assembly of engines and other components to be fitted in the LCV products and for exports. The production centres would be in India.
Meanwhile, technology development company, which would be a 50:50 joint venture between the two auto companies would develop LCV products and related powertrains. These products, sold under both Ashok Leyland and Nissan brands would target Indian and identified emerging markets. The two are looking to cooperate in sales and distribution. This includes access for Nissan to Ashok Leyland dealer network in India and use Nissan dealer networks in identified export markets.