One more addition to india’s auto hub – Nissan

Japan’s second largest automaker Nissan Motors plans to build a 200,000 unit-a-year car plant in India with an investment of $420-500 million according to the management of the company.

It has short listed two-three coastal cities in western and southern India as potential locations and plans to negotiate with local governments before making a decision, which could come very soon.

Construction on a main assembly plant will begin this year a report disclosed by the Company. Nissan expected to launch operations in the latter half of 2009 with an annual output capacity of around 200,000 units.

To support the auto maker’s production, about 10 parts suppliers from Japan will start local operations, bringing the group’s total investment to around 100 billion yen,

Production will mostly centre on a new compact car with a heart of around 1000cc. About one-third will be sold in India, and the rest will be exported to Europe and other regions.

Nissan is considering whether to participate in a joint project between France’s Renault and utility and tractor maker Mahindra & Mahindra , which are due to build a plant to assemble 500,000 cars a year from mid-2009. Renault holds 44% of Nissan.

Nissan has said it would make a decision by the beginning of March. The Nikkei said Nissan would still take a stake in the Renault-Mahindra venture, but had decided that India’s fast-growing car market warranted a plant of its own, especially in light of export possibilities due to cheap production costs.

Nissan’s plant would gradually add more models, expanding its annual capacity to 400,000 units.

Among its group suppliers, Calsonic Kansei Corp is due to invest as much as 5 billion yen for a factory to produce air-conditioning units and other parts, the Nikkei said.

Nissan has been looking for a way into the Indian market, where Suzuki and Honda have a strong presence. Nissan, which exports some 200 vehicles to India from Japan a year, will develop a dealership network and open about 100 branches in major urban areas by 2010.

Nissan has an agreement, under which Suzuki is to supply Nissan with a new small car on an original equipment manufacturing basis, mostly for export to Europe starting in 2008.

Recently it called off discussions to form a separate joint manufacturing project in India with Suzuki.