Nissan to double China capacity to tap hot market

Nissan to double China capacity to tap hot market

Zhengzhou, China/Hong Kong: Japan’s Nissan Motor Co Ltd plans to double its capacity in China to 1.2 million units by 2012, as it aims for a 10% share of the world’s biggest auto market, its top executive said on Monday.

The new plan is 20% above Nissan’s earlier production target, underscoring the car maker’s strong interest in China, which has been a major bright spot for many automakers as the global industry struggles to recover from a steep downturn.

Nissan, 44% held by France’s Renault SA, runs an auto venture with Dongfeng Motor Group Co Ltd, which on Monday announced the opening of its first sport utility vehicle (SUV) plant in the central Chinese city of Zhengzhou.

Separately, Nissan-Renault has no plan to buy shares in General Motor’s upcoming initial public offering, Chief Executive Carlos Ghosn told Reuters on the sidelines of the opening ceremony for its new SUV plant.

Ghosn also told reporters that Nissan was expanding its other two production bases in China.

“Our three key manufacturing bases in Zhengzhou, Huadu and Xiangfan, we will nearly double Nissan’s current production capacity in China to 1.2 million vehicles by 2012," he said at the opening ceremony. “This is 200,000 more cars than we announced at our year-end results this past May."

The new SUV plant in Zhengzhou has a total investment of 1 billion yuan ($148.7 million), and will be run by Zhengzhou Nissan Co Ltd, a joint venture between Nissan and Dongfeng.

The new plant would have an annual capacity of 180,000 units and together with Zhengzhou Nissan’s first plant, the company’s total production volume would reach 240,000 units by 2012 after the expansion, Zhengzhou-Nissan said in a statement.

“The Zhengzhou Nissan plants -- currently our base for light commercial vehicles and sport utility vehicles -- now comprise our second-largest production site in China after Huadu," Ghosn said in the statement.

China’s car sales in August jumped nearly 60% from a year earlier, bouncing back strongly after sluggish sales in the summer months with help from central government subsidies for fuel-efficient models.

Ghosn said Nissan aimed for a 10% share of the China market but gave no timeframe for the goal. Japanese automakers had a combined market shares of about 20%, he said.