Nissan’s $8B Chinese expansion

Japanese auto-maker looks introduce 30 new models by 2015 and alleviate its reliance on U.S. market, CEO says

July 26, 2011   by The Canadian Press

BEIJING—Nissan will spend $8 billion to expand its Chinese operations as part of a global strategy to focus on emerging markets and reduce the car-maker’s reliance on the U.S.

Nissan and its Chinese partner, Dongfeng Group, will open new factories to meet surging demand and introduce 30 new models by 2015.

The new models include a China-produced electric car to be sold under the low-priced Venucia brand that Nissan Motor Co. is creating for the Chinese market.

The company’s plans call for building a new factory in the eastern city of Changhzhou in Jiangsu province.

Another factory for passenger vehicles is due to open next year in Guangzhou in southern China, where Nissan already has one factory. A factory for commercial vehicles is slated to open this year in Shiyan, a city southwest of Shanghai in Hubei province.

All development of Venucia-brand vehicles will be carried out in China, where Nissan has a design studio in Beijing and 3,500 employees in research and development.

The company expects that number to increase to 6,000 in five years.

“China is key to our total growth,” says Nissan CEO Carlos Ghosn.

The world’s automakers are increasingly looking to China, the biggest auto market by number of vehicles sold, to drive revenue amid weak demand elsewhere. Chinese auto sales jumped 32 per cent last year to 18 million vehicles, defying global economic malaise.

Nissan is looking to double its annual sales in China to 2.3 million vehicles by 2015, up from 1.3 million last year, says Ghosn.

The Japanese automaker was a latecomer to the Chinese market but has succeeded with a wide range of offerings, from Infiniti luxury models to the cheaper Venucia brand, says Masataka Kunugimoto, an auto analyst at Nomura Securities Co.

Ghosn says Nissan’s China expansion is part of an effort to expand in faster-growing markets, which includes new factories and other initiatives in Russia, Brazil, India and Southeast Asia.

Nissan’s ambitions reflect a broader trend among global automakers, creating models for China or incorporating Chinese tastes into global designs. General Motors Co. has also launched its own low-cost China brand, Baojun.

Ghosn says plans to produce an electric car in China are driven both by expected strong demand bolstered by government promises of subsidies to buyers and other support for clean vehicles and by explicit pressure from Beijing on automakers.

Nissan plans to export about 40,000 Chinese-made vehicles next year to South Asia, Latin America and other developing markets Ghosn says.

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