The restrictions may have been lifted, and Nissan again had an operational factory, but the company was not in great financial shape. Whilst they had the funds to continue producing cars that were based on ageing pre-war designs, they did not have the resources to design completely new vehicles. The cars Nissan built during these years, whilst being robust and well built, were hopelessly out-dated in comparision with the rest of the world. Their factory was also out-dated by world standards, with cars being almost entirely hand built in a slow and time consuming manner. Factory photos from this era show that the main assembly building did not have overhead lighting, the workers instead toiled under hand-held lead lights. Nissan's President in 1951 was Genshichi Asahara. Asahara was well aware of his company's inability to move ahead while building cars that belonged in a different era, and decided that the way ahead was to build cars under licence. This would allow the company to learn new techniques whilst being able to sell a locally built car of world standards. Asahara searched the world for a suitable business partner. After briefly flirfting with the idea of a tie-up with Volkswagen, which seems to have been dropped mainly due to the perceived notion that a joint venture between the two enemy nations of the Second World War would have been a marketing disaster, Nissan eventually found a willing partner in the form of the Austin Motor Company of England.
Austin had been founded in 1905 by Herbert Austin and had achieved world wide success with it's pre-war Austin 7 models, and continued on after the war with the Austin 16hp and Austin A40 models. One reason why Austin became a prefect ally for Nissan was that right from the begining of the century, and even right through until today, the English and the Japanese people seem to require almost exactly the same things in a car, and English and Japanese cars of any corresponding era are almost always nearly identical in their dimensions. It also helped that Austin had been selling cars in Japan after the war and had developed a good reputation for their ability to operate reliably on Japan's awful road network, of which less than 5% was sealed. By 1952 Austin had sold 1288 cars in Japan, and as a result they were a reasonably common sight.
After a series of meetings a final agreement was signed on the 4th of December 1952, described as a "technological co-operation agreement" for Nissan to Build Austin passenger cars under licence for the next seven years. The deal Austin agreed to was quite a generous one. Nissan would buy component kits from Austin to allow Nissan to assemble the Austin A40 Somerset sedan, and for the first year Nissan would pay no royalties to Austin. In the second year royalties would be set at 2% of the car's retail price, with a minimum payment of £10000. In the third year this would rise to 3 1/2% with a minimum of £20000, and in the forth year through until the end of the agreement it would be set at 5% with a minimum payment of £30000. The deal stipulated that the Nissan-built Austins were to be sold in Japan only and were not to be exported. The deal also allowed Nissan to build the Austins with Japanese made parts, which would be slowly substituted until the cars were completely Japanese made. But of greater long-term importance to Nissan was the rights to use the engine designs in their own vehicles. This clause was of great benefit to Nissan because it's next generation of engines were all based on the basic architecture of the Austin B series engine, even right up until the 1980s Nissan were still powering small commercial vehicles and forklifts with versions of these engines.
The Nissan assembled Austin A40 Somerset went into production in 1953. Austin supplied two British engineers to oversee the start of production. The Somersets were built up until November 1954 and were all assembled using English made parts. The Somerset was a mid-sized four door sedan that was powered by an Austin engine which displaced 1198cc and produced 42hp.
In December 1954 Nissan started assembling the Austin A50 Cambridge. The Cambridge was also a mid-sized sedan. In England it was available with either a 1198cc engine or a 1489cc engine, for the Japanese version Nissan decided to use only the larger engine, which produced 50hp. Again all the components came from England, but gradually Nissan started to fit locally sourced components and gradually began pressing their own panels and in 1956 Nissan started casting their own version of the Austin B series engines. Every time a new Nissan built component was to be used on the Austin it had to be tested and evaluated by Austin engineers. By 1957 the car was being completely made with Japanese parts. At that time Austin's engineers had reported back to their headquarters that the Nissan built Cambridges were of the same quality as the English built versions, and that later in the production run the cars were of superior quality to their British counterparts.
While Nissan were building the Austin sedans part of the agreement was that they could use the Austin B series engines in some of their other vehicles, and in 1956 Nissan started fitting the Austin engine to their new range of mid-sized trucks, including the Nissan Junior B40 and the Nissan Junior Caball C40. Around this time Nissan engaged the services of an American engineer by the name of Donald Stone. Stone was hired to develop a new Nissan engine that would be based on the Austin B series engine. Stone made several significant improvements to the Austin design, most notably was the addition of a rope type seal to the rear of the crankshaft. The Austin had no seal in this location and instead relied on a reverse spiral groove to direct the oil back into the engine, a system that was less than successful that gave the Austin a poor reputation for oil leaks. The new Nissan engine, which would be christened the C series, was dry as a whistle, with the oil leak issue completely solved. These engines are known within Nissan as the "Stone engine", as a mark of respect for the engineer. These engines would evolve into the E and J series engines, and would power Datsun sedans through the 1960s, and be used in commercial vehicles right through into the 1980s.
The agreement with Austin expired in December 1959, and the Austin Cambridge was replaced by the completely Nissan designed Nissan Cedric sedan. Whilst the agreement with Austin paid handsome dividends for Nissan and their long term growth, it coinsided with a dramatic decline in fortunes for Austin. At the start of the 1960s Austin was a motor industry powerhouse and Nissan was only a small player in the industry who was only just starting to export vehicles in small quantities. By the start of the 1970s Nissan was one of the biggest car manufacturers in the world, exporting cars of exceptional quality to over 100 countries. Their growth stood in stark contrast to Austin, who by 1970 were dead in the water and had been sucked into the motoring abyss that was British Leyland. Under the Leyland umbrella the once respected Austin spent the next decade building some of the worst vehicles on the planet as their sales volumes fell through the floor.
