July 26, 2011 / 12:27 PM / 7 years ago

Nissan to invest $7.8 billion in China by 2015

BEIJING (Reuters) - Nissan Motor (7201.T), the largest Asian automaker in China, plans to invest 50 billion yuan ($7.8 billion) there by the end of 2015, as it accelerates its expansion in the world’s largest auto market.

Nissan Motor Co's logo is seen as a car and visitors are reflected on a window at the company showroom in Yokohama, south of Tokyo June 23, 2011. REUTERS/Toru Hanai

Dongfeng Motor Co (DFL), Nissan’s venture with Dongfeng Motor Group (0489.HK), aims to sell 2.3 million vehicle, up from 1.3 million units last year, Nissan Chief Executive Carlos Ghosn told reporters in Beijing on Tuesday.

The China initiative is essential to achieve the company’s recently unveiled mid-term business plan to boost its global market share and profit margin to 8 percent within six years.

“We used to be extremely dependent on one market ... The development of the Chinese market for us is making Nissan less dependent on one region, or one country, or one market,” Ghosn said.

“We have no restriction, no limit; whatever we are ready to do worldwide, we will do it in China.”

China is already the largest market for Nissan, which made its presence felt there much later than General Motors (GM.N) and Volkswagen (VOWG.DE).

To reach its new growth target, DFL will launch about 30 new products during the period, including an electric vehicle under the joint-venture brand name Venucia.

It will add a light commercial vehicle plant in Changzhou in Jiangsu province. Facilities scheduled to be up and running next year include a passenger vehicle plant in the southern city of Guangzhou and one in central China, making heavier commercial vehicles.

The number of DFL’s dealerships in the country, meanwhile, will be reaching 2,400 by 2015, up from 1,400 now.

Ghosn, who has been at the helm of Nissan since arriving from partner Renault (RENA.PA) in 1999, reiterated the target to capture a 10 percent market share in China eventually.

Last year, Nissan nabbed a record 5.8 percent share of the global car market. It now has a 6.2 percent share of the market in China, where it leads both Toyota Motor (7203.T) and Honda Motor (7267.T).


China’s once-sizzling auto market has cooled significantly after the government stripped away most of its policy incentives at the end of 2010. Car sales declined for the first time in more than two years in May.

But Nissan’s tally remained healthy.

In the first half, DFL sold 734,440 vehicles, up 13.4 percent year on year, beating a 3.4 percent climb in the overall market.

Toyota sold 354,400 vehicles, down 2.2 percent year-on-year, while Honda sales fell 8.9 percent to 236,264 units.

Industry observers attribute Nissan’s stellar sales to its broader product offering and more flexible parts procurement practices, which made it less vulnerable to parts shortages in the wake of the deadly Japanese earthquake and tsunami in March.

“Nissan ... outgrew the market. Its tie with Renault might be of some help when it comes to parts supply,” said Yale Zhang, managing director of Auto Foresight, a Shanghai-based industry consultancy.

Ghosn remains upbeat on Nissan’s growth potential in China.

“We have been systematically wrong on China on the forecast for the past seven years. There wasn’t even one year we even came close ... And we were wrong on the conservative side.”


To bolster China’s energy security, Beijing has declared the electric vehicle industry a top priority, earmarking $1.5 billion a year for the next 10 years to transform the country into one of the leading producers of clean vehicles.

But customers remain unimpressed by the high cost and limited journey range of the vehicles and a lack of charging infrastructure.

In Shanghai, a huge metropolis with more than 20 million people, there are only 10 registered electric cars, while the number in Hangzhou is only slightly higher at 25, according to China Business News.

Still, Ghosn is committed to selling its locally made electric Venucia in China in 2015, joining the likes of GM, Volkswagen and Daimler (DAIGn.DE) to explore green opportunities in the country.

“With the Chinese government saying clearly that they are going to support new energy cars ... you are going to see more on offer,” he said. “So I am expecting in the next five years the sector is going to boom!”

Editing by Matt Driskill and Will Waterman

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