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Nissan begins small car project sans Ashok Leyland

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Nissan Motor India has started work on its small car project, which will be its entry-level car and positioned below its Micra compact car. The Chennai-based car company, earlier in talks with commercial vehicle maker Ashok Leyland for the same project, is prepared to go solo, especially as the Hindujas (promoters of Ashok Leyland) have not shown much interest.

The new project, which entails multi-crore investment, will be aimed towards developing a new model from the scratch from a new platform. Within Nissan, this new projects holds greater significance, as it will eventually replace the model exported to Europe by Maruti Suzuki.

A senior executive from Nissan said work on the new small car, such as market study and model positioning, has already begun and would be completed in a few months. This will be followed by production and development plans.

“The market is robust and we want to get into that race as quickly as possible,” said Kiminobu Tokuyama, Managing Director and CEO, Nissan Motor Company, in an interview to Business Standard.

Sources say the segment, which Nissan in looking to exploit, is the one which is dominated by models like Maruti Alto, A-star, Wagon R, Tata Indica, Chevrolet Beat, Ford Figo and Hyundai i10 or even below that. These models fall in the range of Rs 3.5-3.9 lakh.

“We plan to have a car below the Micra. We have a significant demand for this segment and we have been studying it. We are, at present, in the concept stage and studying customers,” Tokuyama added.

In October, Ashok Leyland Chairman Dheeraj Hinduja had declared the car project with Nissan had to be abandoned. He said the segment had become very competitive following better technology brought in by global car manufacturers.

Nissan intended to build a car in India from the scratch to adhere to all quality and price targets set by the company. This model will play a major role for Nissan towards the export market competing on price parameters.

The Micra hatchback, launched by Nissan earlier this year, competes in the premium segment and is priced in the range of Rs 4.05-5.35 lakh (ex-showroom, Delhi). Nissan was in talks with Ashok Leyland to capitalise on the India company’s cost expertise and vendor knowledge.

Sources said the new compact car is the most crucial venture for the Japanese company, for which it is prepared to venture on its own or with its traditional partner Renault of France.

“We will not rule out any options, including doing it alone or through an alliance. We will pick up the best plan. Ashok Leyland was one of the potential players for the car project. Globally we are a very flexible company where there is a need for an alliance we do it and where it does not we go solo,” he said.

Nissan Europe presently procures an average of 35,000 units of the A-star (rebadged as Nissan Pixo) from Maruti Suzuki and sells them in European countries. This agreement with Maruti, which was initially limited to just one order of around 30,000 units got extended till 2013.