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Nissan has signed a binding co-operation agreement with the Indian commercial vehicle maker Ashok Leyland, part of the Hinduja group, to set up three companies to support the light commercial vehicle (LCV) business.

The agreement was signed in Chennai today by R. Seshasayee, managing director of Ashok Leyland and Carlos Ghosn, president and CEO of Nissan Motor. The agreement follows a heads of agreement document in August and formalises the partnership between the companies, which will include the development and manufacture of LCV products under both the Ashok Leyland and Nissan brands as well as cooperation in sales.

The two companies expect to invest around US$500 million for the creation of three joint venture companies that are to cover the following business areas:

• Vehicle Manufacturing Company – a company with exclusive rights to manufacture LCV products in India for both the partners. Manufacturing facilities will be located in India and the company will be owned 51% by Ashok Leyland and 49% by Nissan. Production will start in 2010 and will include the new generation Nissan Atlas F24 light-duty truck, in addition to a range of products covering applications from 2.5 to 8 ton gross vehicle weight (GVW). In the medium term, production volume, intended for both Indian and export markets, is expected to be over 100,000 units annually.

• Powertrain Manufacturing Company – responsible for the manufacture and assembly of engines and other drivetrain components to be fitted in LCV products and for export. Manufacturing will be in India and the company will be owned 51% by Nissan and 49% by Ashok Leyland.

• Technology Development Company – responsible for the development of LCV products and related powertrains, destined for the Indian and select global markets. This JV company will be owned 50:50 by the two partners and based in Chennai. The products developed will be sold under both the Ashok Leyland and Nissan brands.

In addition, the two partners also expect to cooperate on dealer networks in specific global markets. For example, this could provide Nissan with access to Ashok Leyland's dealers in India and for Ashok Leyland, access to Nissan dealer networks in export markets.

Gopichand P. Hinduja, president of the Hinduja Group said: “The Hinduja Group is firmly committed to the expansion of its automotive business globally. Nissan, under the leadership of Mr. Carlos Ghosn, has shown exemplary vision in using partnerships for growth. With this partnership I am confident that Ashok Leyland's growth plans in the LCV business will be realised.”

Carlos Ghosn said: "The LCV business is one of Nissan's most important global growth engines. This agreement accelerates our LCV business in India and lays the foundation for further growth through exports. Ashok Leyland shares our vision of a successful win-win partnership, where both companies are focused on value generation for all stakeholders. We see India emerging as an important hub in Nissan’s global LCV manufacturing footprint."