Bloomberg News

Nissan Close to Naming Infiniti Head to Boost China Sales

May 22, 2012

Nissan Motor Co. (7201), Japan’s second- largest carmaker, is preparing to appoint a global head for its Infiniti luxury brand after setting up the unit’s headquarters to Hong Kong to boost China sales.

Nissan has made its pick and the executive will be named “at a fitting time,” Chief Executive Officer Carlos Ghosn told reporters in Hong Kong today. Nissan, which introduced the luxury brand to China in 2007, plans to increase China sales by 50 percent this year, he said.

Nissan is counting on China to help drive growth and challenge Volkswagen AG (VOW)’s Audi, Daimler AG (DAI)’s Mercedes-Benz and Bayerische Motoren Werke AG. Ghosn plans to more than triple Infiniti sales to 500,000 units in five years to raise its share of the global luxury car market share to 10 percent.

“What they are trying to do in China is what Toyota’s doing in the U.S.,” said Kota Yuzawa, an analyst of Goldman Sachs Group Inc. (GS:US) said today by phone. “It’s very much from scratch. Lexus 20 years ago was also from scratch.”

Global management, sales and marketing staff for the brand will be based out of Hong Kong from today, while engineers will remain in Yokohama, Japan, Haruko Wada, a spokesman for Infiniti in Hong Kong, said by telephone. The new headquarters will have a workforce of about 100 by the end of this year, mostly hired externally, she said.

Nissan’s deliveries of Infiniti vehicles in China climbed almost 40 percent to 19,000 units last year, making it the luxury brand’s second-largest market after the U.S., where two- thirds of Infiniti cars were sold last year.

Shares Gain

Nissan rose 4.4 percent, the most in six months, to close at 776 yen in Tokyo trading, while the benchmark Nikkei 225 Stock Average added 1.1 percent. The stock has gained 12 percent this year, outperforming the Nikkei.

“Establishing our headquarters in Hong Kong, the gateway to China, is an acknowledgment of the center of gravity in luxury vehicle sales,” Andy Palmer, the Nissan executive vice president in charge of Infiniti, said in a statement today. He said dealerships will increase from 25 last year to more than 100 over the next year.

Sales of premium cars have “considerable” room to grow as they only account for about 5 percent of vehicle sales in China, compared with 10 percent in the U.S. and 16 percent in Europe, Yuzawa wrote in an April 20 report. Infiniti sales may reach 300,000 in the country by March 2021, according to Yuzawa’s report.

Infiniti M Sedan

Nissan said last month it will begin manufacturing two Infiniti models in China from 2014. It unveiled a stretched version of the Infiniti M sedan designed for Chinese customers at the Beijing Auto Show last month.

Ghosn said the details, including the location, of the Infiniti’s China plant will be announced by the end of the year.

Nissan manufactures most Infiniti models in Tochigi, Japan, about 100 kilometers (62 miles) north of Tokyo. The yen’s climb, reaching a postwar high in October, led the company to reduce Japan production. Infiniti JX SUVs started rolling off assembly lines in Tennessee in February, Nissan spokesman Toshitake Inoshita said.

“The challenge is how they will bring new models to meet local demands,” Masatoshi Nishimoto, an analyst with IHS Automotive, said this month. “The Chinese premium car market is already very competitive as there are German luxury brands like Audi and BMW that have already established a good reputation among local consumers.”

Adding Markets

Infiniti vehicles are sold in 46 countries and regions, with the company planning to expand that to 70 markets by 2016. This year, it will add new markets including Australia, Mexico and Brazil, Ghosn said.

The company plans to produce vehicles at “full-speed” and stockpiling is “not an issue for Nissan” in China, where industry vehicle sales may increase 7 percent to 8 percent this year, Ghosn said.

On the low-end side of Nissan’s business, the company plans to expand sales of Datsun-branded cars to the Middle East, Africa, and Latin America, after introducing them in Indonesia, India and Russia starting in 2014, Ghosn said in a Bloomberg Television interview in Hong Kong today.

“We’re going to go step by step,” Ghosn said. “It’s going to be affordable.”

Ghosn is reviving the Datsun brand after three decades to capture demand for low-end cars in emerging markets as part of Nissan’s plans to increase its share of global vehicle sales to 8 percent by March 2017. Nissan has said it expects Datsun, the company’s third global brand, to account for as much as half of its sales in those markets in five years.

On the yen, Ghosn said he expects the Japanese currency to weaken to 80 to 85 yen against the dollar this year.

To contact the reporters on this story: Ma Jie in Tokyo at jma124@bloomberg.net; Aibing Guo in Hong Kong at aguo10@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net


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