Bloomberg News

Nissan Weighs Mexico for Next North America Plant

November 14, 2012

Nissan CEO Carlos Ghosn

Carlos Ghosn, chief executive officer of Nissan Motor Co. Photographer: Susana Gonzalez/Bloomberg

Nissan Motor Co. (7201), Mexico’s largest automaker, will consider the country along with the U.S. for a new North American factory to meet demand in both nations, Chief Executive Officer Carlos Ghosn said.

“We will need capacity in North America and yes, there is a high probability that in the future we will be announcing a new plant in Mexico or in the U.S.,” Ghosn told reporters in Mexico City yesterday, without providing a timetable for the decision.

Nissan is already building its third plant in Mexico, breaking ground in July on the $2 billion factory in the central state of Aguascalientes. The Yokohama, Japan-based automaker boosted production in Mexico by 16 percent to more than 583,000 vehicles in the first 10 months of this year, according to the Mexican Automobile Industry Association.

That makes Nissan part of an assembly-line surge pushing Mexican auto output and exports toward a record in 2012. Foreign automakers have announced $7.8 billion in investments in the country in the past 24 months, according to Sean McAlinden, a labor economist with the Center for Automotive Research in Ann Arbor, Michigan.

The new North America plant would probably be needed based on sales forecasts for the next three years, Ghosn said in an interview on Bloomberg Television’s “Taking Stock” with Pimm Fox. Ghosn said no decision has been made yet on the location or timing of the plant.

Sentra, Versa Models

Nissan makes such models as the Sentra and Versa in Mexico. It is also investing 2.6 billion reais ($1.3 billion) to build a plant near Rio de Janeiro with a production capacity of 200,000 units that’s scheduled to open in 2014.

Demand in the U.S. “is recovering but not yet to the level before the 2008 financial crisis,” said Takeshi Miyao, an analyst at research firm Carnorama Japan in Tokyo. “Considering the U.S. demography and economy, the demand may keep recovering, so Nissan’s capacity in North America will not be enough and it’s necessary to have another plant.”

Ghosn has said he wants Nissan to win 10 percent of auto sales in the U.S., where it currently holds a 7.9 percent market share, down from 8.1 percent a year ago. The company has a 25 percent share in Mexico, making it the nation’s top auto seller, according to the Mexican Automobile Industry Association.

Ghosn said he was in Mexico to meet with President-elect Enrique Pena Nieto and to inaugurate a charging station for electric cars today.

Leaf Sales Decline

Nissan isn’t on pace to meet its sales target for battery- powered Leaf hatchbacks in the U.S., Ghosn said in the Bloomberg Television interview.

“The forecast we have given ourselves for the year will not be reached,” he said.

In January, he set a target of selling 20,000 Leafs in the U.S. this year. Sales through October totaled 6,791, down 16 percent from a year earlier.

Limited charging infrastructure for electric vehicles in the U.S. has tempered demand, Ghosn said.

“We’re trying to convince more cities and states to invest in this infrastructure,” he said. “We recognize the fact that the increase of sales is taking more time than we thought at the beginning.”

To contact the reporters on this story: Brendan Case in Mexico City at bcase4@bloomberg.net; Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


Best LBO Ever
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus