New Delhi: Japanese auto firm Nissan Friday terminated its sales, marketing and distribution agreement with Hover Automotive India, which disputed the move, saying the action had no legal basis and the pact was still intact.
While Nissan said it would henceforth go alone in selling its vehicles in India, Hover Automotive India (HAI) said it would "pursue the necessary course of action to protect interests of its employees and stakeholders."
Nissan Motor India Private Ltd (NMIPL), the Japanese company's local subsidiary, has assumed full responsibility for the sales, marketing and distribution of all Nissan-branded vehicles and parts in India, with immediate effect from February 14, Nissan said in a statement, without specifying any reasons.
It said the "agreement with Hover Automotive India Pvt Ltd for exclusive sales, marketing and distribution of Nissan branded vehicles and parts in India has been terminated."
"Nissan is now at a point of maturity in India where the time is right to establish our own marketing and distribution operations. Nissan's priority will be to ensure a smooth transition from current operations. We remain committed to our customers and will continue to deliver high quality products and services," Nissan President (India Operations) Kenichiro Yomura said.
Details of the business structure will be announced in due course, the company said.
The HAI management took strong exception to Nissan's announcement. HAI reserves all rights and remedies available and will pursue the necessary course of action to protect the interests of its employees and stakeholders, it said.
"Nissan does not have any legal basis for the termination of services of its national sales company, Hover Automotive India Pvt Ltd in India," HAI said.
Claiming that negotiations with Nissan are ongoing, HAI said, "It is premature to say any agreement regarding termination has occurred."
"HAI understands that Nissan wants to move quickly but it is possible only with the cooperation and consent of HAI and we look forward to working with Nissan and are hopeful of an amicable resolution. Until then, HAI expects to continue to be the sole and exclusive distributor for the Nissan brand of vehicles in India," the company added.
Nissan, which currently sells models such as the Sunny, Micra and Terrano in India, said in November that its Datsun vehicles would be sold directly through Nissan Motor in India and not through Hover.
Nissan had said Datsun will work primarily with existing dealers, appointed by Hover, which have demonstrated high capabilities and commitment to the Nissan brand.
This arrangement would allow Datsun to establish a top quality, expansive retail network and open the brand to a large segment of the potential market straight from the initial launch, Nissan said in November.
"Selling the Datsun Go and future Datsun models through Nissan Motor represents a natural evolution of the company's operations in India, which are well recognised in the market," Global Head of Datsun, Vincent Cobee, had said at the time.
At the recently concluded Auto Expo, Nissan had said the first model, Datsun Go, a hatchback in the under Rs 4-lakh price band, would be ready for bookings next month.
Nissan, which started in India in 2005, had appointed Hover as its national sales company, acting as the sole and exclusive distributor for managing the marketing, sales, after-sales service and training & dealer development functions for the entire Indian territory.
However, in the recent past, their relationship was under strain with dealers unhappy as poor sales hurt their service and spare parts business.