(Recasts, adds company comments, details)
By Chang-Ran Kim
TOKYO, May 19 (Reuters) - Nissan Diesel Motor and major shareholder Nissan Motor said on Monday they would jointly develop light trucks in a move that ends alliance talks between Nissan Motor and Isuzu Motors Ltd .
Nissan Motor, Japan's third-largest automaker, had been looking for a partner to expand its operations in the high-profit market for light-duty commercial trucks -- part of an aggressive product offensive aimed at boosting its already strong profits.
The automaker had been discussing an alliance with Isuzu Motors, which currently supplies it with "Elf" two-tonne trucks, but said last month that those talks had hit a snag and that negotiations had begun with affiliate Nissan Diesel.
Under the agreement, the two firms will set up a joint venture late this year to develop trucks with a payload of 1.0-2.0 tonnes. The company, to be capitalised at 15 billion yen ($129.7 million), will be owned 85 percent by Nissan Motor and the rest by its affiliate.
Andy Palmer, Nissan Motor's programme director for light commercial vehicles, told a news conference the tie-up would enable the automaker to competitively develop, build and market light-duty trucks worldwide.
He said the alliance would help the partners take advantage of a fast-growing segment, which he estimated would grow to around 1.8 million units over the next few years from about 1.4 million units last year.
The joint venture aims to produce 60,000 units a year globally, starting in 2006 or 2007, with 16,000 of that in Japan.
"We see the small trucks segment as one that has big potential to grow, especially in China," he said.
Debt-ridden Nissan Diesel is expected to benefit from lower development costs and a much-needed steady source of profits.
The truckmaker, one of Japan's weakest, has been hurt by years of falling truck sales at home and huge interest-bearing debts left over from the bubble economy years.
The company on Monday posted a group net loss of 3.35 billion yen ($29 million) for the business year that ended in March, compared with a profit of 610 million yen a year earlier and in line with a forecast issued last month.
For the current year, however, it forecast a net profit of two billion yen on a 10 percent rise in sales to 420 billion yen, helped by robust domestic sales and continued growth overseas.
The new joint venture will produce the light-duty trucks aimed to be sold in Japan at Nissan Diesel's Ageo plant.
The partners have yet to decide on overseas production sites. But Palmer said cooperation with Nissan Motor's Chinese partner, Dongfeng Motor Corp, was an option for that market, adding the joint venture was unlikely to build any new plant sites.
Shares in Nissan Motor, owned 44.4 percent by French automaker Renault , ended the day down 0.45 percent at 884 yen, while Nissan Diesel, owned 22.5 percent by both Nissan and Renault, lost 2.91 percent to close at 167 yen.
A Nissan Motor spokesman said Renault was not seen having any role in the venture for now.
Nissan Diesel's shares, along with those of Japan's other major truckmakers, have jumped this year thanks to a surge in Japanese truck sales since late last year ahead of the introduction of stricter environmental regulations.
The stock has more than doubled since closing last year at 69 yen.
Isuzu, owned 12 percent by General Motors Corp , was unchanged at 102 yen. ($1=115.62 yen)