Date:10/11/2006 URL: http://www.thehindubusinessline.com/2006/11/10/stories/2006111004791400.htm

Maruti slips 3% after Nissan ends Suzuki talks

Our Bureau

On back of Nissan ending talks with Suzuki

New Delhi , Nov. 9

Stock prices of Maruti Udyog Ltd closed nearly three per cent down on Thursday after Nissan Motor Co said that it had ended talks with Suzuki Motor Corporation on a manufacturing project in India.

In a short statement, Nissan said that the company "was committed to establishing a local manufacturing presence in India as part of our global growth strategy. Nissan is in active discussions with Renault and Mahindra concerning a new industrial partnership and will make a final decision within four months. In consequence, we will not continue our discussions with Suzuki concerning a new industrial project in India. As previously announced, we continue to work with Suzuki concerning the OEM supply from India of a new small car for sale mainly in Europe."

Suzuki and Nissan earlier this year indicated that they had held discussions to set up a new unit in India, which would export about two lakh units.

In fact, Suzuki had indicated that it was targeting sales of 10 lakh units by 2010, out of which 40 per cent (or four lakh units) will be exported. However, analysts point out that this target is likely to be halved now, with Nissan deciding to source only 50,000 units of a small car from Maruti's new Manesar facility.

According to Mr Jagdish Khattar, Managing Director, Maruti Udyog Ltd, the export target for 2010 would be 1.5 lakh Suzuki cars and 50,000 Nissan cars. The additional two lakh would have come from the new unit, he added.

Though there was no official confirmation of the same, industry sources said that Nissan and Suzuki failed to agree on the cost-sharing of the new industrial project, where Suzuki was to produce Nissan-brand cars.