India's Auto Industry Attracting More Investment

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Renault, Mahindra to Build Plant, Nissan May Join [Bloomberg]

Summary: France's Renault and India's Mahindra & Mahindra announced they will form a 50:50 joint-venture to build an auto plant in India. Renault/Nissan CEO Carlos Ghosn is reviewing Nissan possibly joining the venture, after he said Nissan cancelled plans to build a factory with Suzuki. Nissan will still purchase cars from Suzuki to sell in India. Ghosn commented, "The Indian market (is) one of the fastest-growing in the world and offers an excellent opportunity for growth and profitability." He expects India's auto sales to reach 2 million by 2010, from 1.14m last fiscal year. Currently, only 1 in 7 owns a car. Renault and Mahindra created a $160 million venture last year in India, to build Renault's Logan sedan. The new plant is reportedly expected to have a capacity of 300,000 units by 2009 and 500,000 by 2012 -- approaching 25% of the Indian market (sales-base) per Ghosn's estimates.
Related links: Press releases: Nissan and Mahindra & Mahindra • Commentary: Tata Motor's Disappointing October Sales • Tata Motors: Continuing Positive Outlook But Currently Overvalued • GM, Ford Eye India's Middle Class.
Potentially impacted stocks and ETFs: Nissan (NSANY) • Competitors: Tata Motors (TTM), Honda (HMC), Toyota (TM), General Motors (GM), Ford (F) and DaimlerChrysler (DCX) • Editor's note: Renault and Mahindra & Mahindra do not trade in the U.S.

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