Tata Motors buys Nissan's South African plant

In a bid to expand its global footprint, Tata Motors has acquired Japanese auto giant Nissan's Pretoria-based manufacturing plant for an undisclosed amount.

This is the latest in a series of moves that will see Tata Motors expand operations further. On March 26 it was announced that the company entered into a definitive agreement to buy Jaguar Land Rover for $2.3 billion.

The sale is expected to close by the end of the next quarter and is subject to customary closing conditions, including receipt of applicable regulatory approvals.

The acquisition of the Nissan plant is part of Tata Motors' strategy to get into assembly and manufacturing in its important export markets. Currently, Tata Motors caters to the African markets from its operations from India. Bangladesh is the only other commercial vehicle assembly unit the company has outside India.

It is not clear whether Tata Motors will use this South African unit to manufacture trucks and cars like Indica and Indigo. Initially, it will start with assembly operations and then get into manufacturing its line of products.

South Africa is a major market for Tata, where it caters to a number of neighbouring markets. The company will use South Africa as a sourcing based for components. Tata Africa has presence in over 10 African countries with investments exceeding $100 million. A subsidiary of Tata International, a company with a turnover of $1.6 billion, was established in Johannesburg in 1994.

Meanwhile, Tata Motors saw a six per cent jump in its total vehicle sales (including exports) in March to 66,495 units, against 62,779 units last year. Exports in March stood at 5,765 units, down nine per cent from 6,299 units last year. The total exports in the fiscal stood at 54,272 units.

Meanwhile, Tata Motors has received Thailand government's approval for setting up a greenfield facility to manufacture 'eco cars' at an estimated investment of $250 million.

Thailand had invited investment from car makers for manufacturing environment-friendly cars and proposed to give tax benefits subject to certain conditions. Toyota and Mitsubishi too have received nod for similar facilities.

Thailand had already permitted Honda, Suzuki and Nissan to establish eco car plants, ahead of the latest round of approval.

As per the criterion for setting up a facility to produce 'eco cars', the vehicle's engine capacity should be with less than 1.4-litres and four out of the five engine components would have to be made locally. Another condition for the project was to manufacture 100,000 units in five years.

On the type of car that the company would manufacture in the country, Tata Motors (Thailand) Ltd CEO Ajit Venkataraman said: "Both Nano and Indica fit into the criteria. And something in between may also come. It can be anything."

Most of the manufacturers would likely export the cars to the neighbouring countries in the region as the size of the passenger car market is 200,000 units a year in Thailand.