Nissan to pick up minority stake in India distributor

Japanese giant Nissan Motor is in talks with its Indian partner Hover Automotive India to buy a significant minority stake in the latter.  

Top officials familiar with the development told Financial Chronicle, “The extent of stake and the investment to be made by Nissan are currently being finalised. Once this investment comes through, Hover will become effectively a national sales company for Nissan Motor India.” At present Hover is a three-way joint venture between Moez Mangalji from Westmont Group, G Mohan Singh and Kevin Whalen. Nissan will be the fourth JV partner in Hover.

“In the Middle East Nissan has similar alliance partners but it does not manufacture its cars there,” said a top official familiar with the negotiations. Hover’s partners also plan to infuse fresh capital into the joint venture to fund holding inventory of Nissan vehicles and also to ensure they retain their joint majority holding in the firm.

Hover, which has already appointed 80 dealers for Nissan in India hopes that by 2013 it will have 100 dealers covering 85 per cent of the automotive market in India. “Each dealer is expected to invest between Rs 6-10 crore to set up a full fledged dealership which meets Nissan standards. On an average they would take between three to four years to break even which is the industry norm in India,” said a top Hover official. Nissan, which launched the petrol version of its first sedan Sunny in the country with a base ex showroom Delhi price of Rs 5.78 lakh, expects to introduce a diesel version of the same by the end of this fiscal year.

“India has positively surprised us in many ways. For one we found that Indians are extremely good learners as was exemplified by the time taken to train the people working in our plant being significantly lower than what we had contemplated,” said Normand. He said Nissan found that staff in India learnt and retained learnings well. Nissan has also found Indian auto component suppliers to be quite cost and quality competitive globally. “We are quite excited about the opportunity to procure parts for the Renault-Nissan global alliance here,” he said.

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