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Nissan bets heavily on China by adding 3rd plant

GUANGZHOU – Dongfeng-Nissan Passenger Vehicle Co., Ltd. signed an agreement with Guangzhou municipal government in August to establish a new plant in Huadu District with an investment of ¥5 billion ($730 million) to make Nissan-branded passenger vehicles in 2012, said a report in Huaxia Shibao (China Times).

The new plant, with a designed capacity of 240,000 cars, will sit adjacent to the first passenger vehicle plant of the Sino-Japanese joint venture.

Dongfeng-Nissan, the PV branch of Dongfeng Motor Co., Ltd. (DFL), currently has two production facilities in China – one in Huadu district of Guangzhou city with an annual capacity of 360,000 cars, and the other in Xiangfan of Hubei Province with an annual capacity of 100,000 units. By completion of the new plant, Dongfeng-Nissa’s total production capacity will be lifted to 700,000 units per year.

In order to meet mounting market demands, Dongfeng-Nissan has been running three shifts since July in both of its two plants with a hope to increase its output capacity by 20 percent to 560,000 units, according to a company announcement. “Our current capacity is far from enough to meet demands, and the new plant will solve that problem,” company vice general manager Ren Yong told reporters.


Nissa’s top market

Nissan scored robust growth in China in the first half of 2009. Combined sales of Nissan-branded and Infiniti-branded cars reached 332,181 units from January to June, up 19 percent against the same period last year. Of the total, 225,073 units were Nissan-branded cars, up 41.3 percent year-on-year.

China surpassed the U.S. to become the largest market for Nissan in April and June respectively. Accumulative sales of the Japanese automaker in China in the first half of 2009 finished second only after the U.S., which had 347,744 units sold in the period.

Sales of the Nissan Teana sedan came to 8,951 units in June, up 208.5 percent year-on-year, according to media reports. A total of 45,670 units of the Teanas were sold in the first half of 2009. And combined sales of the Tiida sedan and hatchback hit 13,751 in June, 10.4 percent higher than the same period a year earlier.

Toshiaki Otani, Dongfeng-Nissa’s general manager, told reporters in March that in spite of the fact that Nissan has to cut many investments as a result of the financial turmoil, the Japanese automaker decides to cast its limited resources in the Chinese market.

The company is likely to reach its full-year sales target of 388,000 vehicles ahead of schedule, compared with its full-year sales of 350,000 units in 2008.

“China has become the most important strategic market for Nissan,” said DFL president Kimiyasu Nakamura, “and adding a new plant here will further lift the position of Dongfeng-Nissan in China.”

Nakamura also stated that DFL’s goal is to become the top PV manufacturer in China.


Expansion frenzy

The booming Chinese automotive market caught many automakers unprepared amid the global economic crisis. As a result, a number of them ran out of capacity and thus decided to expand their plants to increase production. According to rough estimates, 17 automakers have announced expansion plans this year.

Korean automaker Hyundai Motor announced on August 4 to add a third plant in China with an annual production capacity of 300,000 units by 2012. BYD Auto said it will lift capacity to 800,000 units by expanding its Shenzhen and Xi’an bases and building a new one in Changsha. Chery eyes an 850,000-unit capacity after expansion, while Chang’an Auto plans scale-up at its multiple production facilities. Tianjin-FAW-Toyota’s third plant with 150,000-unit capacity will enter operation next year. Great Wall Motor will add another 100,000-unit capacity in Tianjin.

According to CBU-Autostats, China sold more than 4 million passenger cars in the first eight months of the year, up 32.43 percent from the same period of last year.


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