Mahindra & Mahindra, the Indian carmaker, confirmed Tuesday that it had pulled out of a $1bn joint venture with Renault and Nissan to set up a factory near Chennai.
It dismissed media reports that Mahindra was unhappy with Renault's tie-up with Indian motorbike maker Bajaj forged last summer.
"M&M has no objections to Renault and Nissan having multiple alliances as long as they do not conflict with the existing Mahindra Renault joint venture," said Pawan Goenka, president of Mahindra's automotive division.
"Multiple alliances are a normal practice in the auto industry and M&M itself has multiple alliances in India."
Carlos Ghosn, chief executive of Renault and Nissan, strengthened ties with other Indian carmakers during a visit to India in October.
He said Renault and Bajaj would together explore plans for an ultra-cheap car. Nissan also inked a $500m pact to make light commercial vehicles with Indian truckmaker Ashok Leyland.
Mahindra and Renault began jointly producing Logan sedans in India last year. Mahindra stressed this joint venture with Renault would be unaffected by Tuesday's announcement.
The Indian carmaker would not elaborate on its reasons for deferring the investment in Chennai but Mahindra is understood to be carrying out a strategic review and wants to redistribute efforts among new and existing factories in India.
Renault and Nissan are among the many global carmakers that are expanding aggressively in India.
Separately, Ford said Tuesday it would invest $500m in India to double manufacturing capacity and build a new compact car for the fast-expanding local market.
The US carmaker said it would begin producing small cars for the Indian market from its facility in Chennai within the next two years. Ford makes mid-size sedans in India but aims to break into small cars, which account for at least two-thirds of car sales in the country.
The new investment in India will increase production of cars from 100,000 to 200,000 in 2010. It will also include a new engine factory that will launch in 2010 with initial annual capacity of 50,000 engines.
It is Ford's second investment in India after an initial investment of $375m to build its factory in Chennai. It follows announcements last autumn of investments in Thailand and China. "Most growth over the next decade will be in this region in key markets in China, India and ASEAN," said Arvind Mathew, president of Ford India.
Gaining ground in emerging markets such as India is critical for Ford as it struggles to counter flagging sales in the US.
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