Nissan-Ashok Leyland: Divorce by mutual consent

Ashok Leyland and Nissan have mutually decided to part ways in the Light Commercial Vehicle (LCV) segment. The automakers have thus announced a restructuring agreement, under which, Ashok Leyland will buy the existing stakes of Nissan in three Joint Ventures (JVs), which were established in 2008. As a result, the three JVs will now become wholly owned subsidiaries of Ashok Leyland Ltd. Financial details of the transaction haven’t been revealed.

The three Joint Ventures operate in three different domains: vehicle manufacturing (Ashok Leyland Nissan Vehicles), powertrain manufacturing (Nissan Ashok Leyland Powertrain) and technology development (Nissan Ashok Leyland Technologies). The first two companies had Ashok Leyland holding 51% of the stakes, while the remaining was owned by Nissan. The third firm had equal ownership by the two partners. Ashok Leyland and Nissan had invested over 1,000 crores in the aforementioned JVs.

As part of the new restructuring agreement signed on September 7, 2016, Ashok Leyland will continue to build and sell the Dost and Partner. Both these LCVs are based on Nissan's design, engineering and technology. Moreover, service and spare parts availability to the customers will be taken care of by a technical support arrangement. The said agreement also carries forward the old deal that supplies made-in-India parts to Nissan Motor Co. Ltd.

The Nissan-Ashok Leyland ties hit a rough phase earlier this year, when the Japanese automaker served a termination notice to then Chennai based manufacturer. Later, Ashok Leyland too sued Nissan, alleging a breach of the partnership agreement. Models manufactured under the JVs didn’t do well in the market either. Nissan had to discontinue the Evalia, and Ashok Leyland shelved the Stile after poor demand for the two products. Currently, only the Dost LCV is doing well in the market.