Nissan Motor, Japan is in the process of buying a minority stake of its distribution partner in India, Hover Automotive India (HAI). The Indian partner manages the whole marketing, sales and dealer development for the Japanese car manufacturer. The car maker operates in the country through a wholly-owned Subdivision, Nissan Motor India Private Limited (NMIPL). The company is planning for a complete overhaul of its car-distribution channel in India. Nissan's investment will result into Hover becoming the national sales company for the NMIPL.
Senior officials of HAI are already in Japan to settle the agreement with the parent company. According to one of the officials, “The structure of the deal is close to finalisation. The broad contours will lead to a different nomenclature of Hover, changing its functioning and management without altering the current marketing, dealership chain and sale of cars.”
Hover is jointly owned by G.M, Singh of Mumbai and Moez Mangalji of the Westmont Hospitality Group and Kevin Whalen. While the Mumbai based partner was a dealer for Honda in Maharashtra in past, Kevin Whalen is an American with rich experience in dealerships. HAI which is valued at over USD 100 million manages 60 dealerships all over the country.
If the agreement with Nissan comes through, it will be the fourth partner in the Joint Venture. The car manufacturer is expected to have one or two company representative on the board of Hover to plan future strategies following the agreement to buy minority stake. This will change the whole nature of business for Nissan in the country as presently the company charges its dealers for the cars and Hover charges a commission to conduct the business.
After HAI becomes the national sales company, the entire inventory of the Japanese company will be handled by them. One of the officials said, “It will change the entire business transaction between Nissan and Hover.” Another official stated that this moves comes from Nissan as an outcome of the low sales volume of car maker in India. In future the car company and HAI are expected to share sales and marketing expenditure. According to sources, the Japanese car manufacturer was not too pleased with the regular changes in the top management of Hover over last two years, which has affected its growth plans in the Indian market.
