Nissan Motors in talks with Hover Automotive to buy stake

Nissan, which operates through a wholly-owned local subsidiary, Nissan Motor India (NMIPL), is looking at revamping its car distribution network in the country. Once the investment comes through Hover will become a national sales company for Nissan Motor India.

Senior Hover executive are in Japan to discuss the modalities of the agreement. "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," said a person close to the development with access to the final plans.

Hover could be valued in excess of $100 million, people close to the development say. Jointly owned by Mumbai-based G M Singh (a former dealer for Honda in Maharashtra), non-resident Indians Moez Mangalji of the Westmont Hospitality Group and Kevin Whalen (an American with decades of experience in dealerships), Hover manages over 60 dealerships across India.

Nissan will be the fourth joint venture partner in Hover, and will bring in fresh capital. Since Nissan is likely to pick up a minority stake, it is expected to have one or two representatives on the board of Hover to mutually plan future strategies.

The new format will change the business of the Nissan in India, which currently bills its cars to its dealers with Hover taking a fee for conducting the entire business.

Once the national sales company comes into operation, Hover will start handling the entire inventory for Nissan and sell cars directly to dealers. "It will change the entire business transaction between Nissan and Hover," said the person familiar with the deal.

Another person close to the development said sales and marketing expenditure will be shared by Nissan and Hover. Nissan's sluggish sales in Indian so far have forced the Japanese parent to intervene.

Those familiar with the matter say top Nissan executives are not happy with frequent changes in Hover's top management in India in the past two years, and this has affected its growth plans for the Indian market.