Tata Motors acquires Nissan’s S African plant

Industry:    April, 2016

Tata Motors acquires Nissan’s S African plant

Tata group’s international acquisition drive doesn’t appear to be slowing down. After the mega deals announced in the steel and FMCG businesses, it’s now the turn of the group’s auto company to expand its global footprint and the destination is Africa. Tata Motors has acquired a South African manufacturing plant from Japanese auto giant Nissan.

This marks yet another expansion of the Tata group in South Africa. While Tata Motors has a greenfield bus making unit in Johannesburg, Tata Steel is setting up a ferro chrome production unit and VSNL is a strong player in the telecom sector.

Tatas had earlier indicated that they would be making vehicles in South Africa though concrete plans — whether it was looking at a greenfield venture or eyeing the takeover of an existing unit — were not disclosed.

The acquired facility in Pretoria has been engaged in making trucks for the $80.5-bn Nissan. It is not clear if Tatas would use this unit for making only commercial vehicles or also for producing its cars. The transaction value, which is expected to be modest, stands undisclosed.

When contacted by ET, the Tata Motors spokesman, confirmed the deal, “The Nissan plant has been acquired by Tata Africa Holdings. Tata Motors is indeed looking at opportunities for assembling and manufacturing its vehicles in South Africa. Tata Motors will take this forward in partnership with Tata Africa Holdings.”

Sources say this latest acquisition is part of Tata Motors’ overall strategy to locally assemble products in its important export markets. The strategy is targetted at neutralising currency fluctuations.

In South Africa, Tata Motors sold over 16,500 vehicles in ’05-06. The models currently being sold include Indica, Indigo, Indigo Stationwagon in the passenger cars segment, trucks in the medium and heavy commercial vehicle segment and Tata Novus tippers in the extra-heavy commercial vehicle segment.

For Tata Motors, this would be yet another international expansion. Two years ago, the auto arm of the Tata Group made its first overseas acquisition snapping up Daewoo Commercial Vehicles in Korea in a $102-m deal and last year bought a strategic stake in Spanish bus maker Hispano Carrocera.

As of July ’05, Nissan had three production facilities in Africa including those in Kenya and Egypt apart from the one in South Africa. The production unit in Pretoria, which was established in 1963, is the oldest of them all.