Ashok Leyland has moved to court to stop Nissan from using its equipments currently installed at its Chennai factory. The facility makes engines for the Dost commercial vehicle.
The commercial vehicle maker Ashok Leyland entered into a joint venture with Japanese major Nissan in 2007 to produce and sell light commercial vehicles in India. But the company’s offerings found little takers and the joint venture relationship turned sour with Ashok Leyland Nissan Vehicles reporting a net loss of Rs. 791 crores for the 2014-15 fiscal. Now Ashok Leyland has moved to a Chennai district court to forbid Nissan from using its equipments in the manufacturing process of Nissan vehicles being produced at the Japanese company’s Oragadam plant.
Nissan has accepted that a petition has been filed in the court and they are in the process of contesting it whereas the Ashok Leyland management has refused to comment on this matter. The move was long expected by industry experts as the Nissan-Ashok Leyland alliance was not a commercial success. The equipment is installed at the Oragadam factory of Renault Nissan India Pvt. Ltd. in Chennai where Nissan manufactures passenger cars for the Indian and export markets. Ashok Leyland manufactures the engines for the 1.25 tonne Dost light commercial vehicle at the same factory.
The joint venture comprises of three separate companies namely Ashok Leyland Nissan Vehicles, Nissan Ashok Leyland Powertrain and Ashok Leyland Nissan Technology Development. In the Ashok Leyland Nissan Vehicles joint venture, Ashok Leyland has 51% stake and Nissan owns 49% of shares. Due to the accumulated losses of the joint venture, Ashok Leyland has to rub off Rs. 214 crores from its books as impairment of its investment.
The Ashok Leyland-Nissan joint venture was not the rousing success that either of the companies had hoped for. Ashok Leyland launched the re-badged Nissan Evalia minivan named Stile which was marketed as a hotel shuttle or a parcel van and the Dost light truck with modern features such as air conditioning and power steering for its top-end trim. The Dost light truck is actually a heavily reworked Nissan C22 Vanette and has sold over 1,00,000 units. The Dost was a commercial success but the Stile tanked badly.
It should be noted that Ashok Leyland is also facing difficult times with its joint venture with the American construction equipment maker John Deere. The company also had to write off Rs. 157 crores last September as impairment of its investment in that business. Currently, the Hinduja Group owns a 51% stake in Ashok Leyland.
Ashok Leyland vs Nissan
– Wants to stop Nissan from using its automotive manufacturing equipment
– Nissan is preparing to challenge the petition
– The equipment is installed at Nissan’s Oragadam plant
– Ashok leyland makes the engine for its Dost light truck at the same plant
