Nissan Moves into South America with Renault's Help
30 May 2000
$300 Million Investment to Start Production in Brazil
Sao Paulo - Nissan Motor Co., Ltd. unveiled today its long-term strategy
in Mercosur to sell a minimum of 150,000 vehicles a year by 2010 with Renault
support. The impact of the Revival Plan gives Nissan its first significant
growth opportunity. Nissan will invest a total of US$300 million by 2005 in
this region to manufacture five products locally. Renault and Nissan will
cooperate in various operations, including manufacturing, purchasing, sales and
administration in the Mercosur market (Argentina, Brazil, Paraguay and
Uruguay). With this expansion of Nissan's operation in the Mercosur, the
Renault-Nissan Alliance is targeting 15 per cent of the market by 2010. The
first Nissan project to be implemented is the production of the New Frontier
pickup model in Renault's Brazilian manufacturing facilities starting first
quarter of 2002.
In order to implement its strategy for lasting profitable growth, Nissan
has decided to significantly increase its presence in the promising Mercosur
market, which is expected to outrun 3 million units by 2010 compared to
current 1.7 million. By leveraging Renault's strong presence in the Mercosur,
Nissan is able to minimize its entry cost to the market while focusing its
investments on strengthening its product line-up.
The first step of this strategy is the manufacturing of the new Frontier
whose production volume will eventually reach 20,000 units per year. This
vehicle will be based on the Frontier 2001 model, which goes on sale in the
United States this summer. It is expected to significantly boost Nissan's
sales in the Mercosur market from the current 4,000 vehicles a year. Initially,
Nissan is to invest US$90 million for this project. In purchasing, 90 percent
of the suppliers will be common with Renault, and the local
content level in 2002 is expected to reach 64 percent.
A year after the Frontier production launch at Renault's facility in
Curitiba (Parana), Brazil, Nissan plans to produce its second model in the
Mercosur at a Renault plant. It is likely that the Nissan Xterra, an award-winning
sport-utility vehicle built in Smyrna, Tennessee, which is a hot-seller in the
United States, could be that second product. Furthermore, three other vehicles,
either passenger cars or SUVs, are being considered for production in the
Mercosur market. An additional investment of US $210 million will be made by
2005 for these new products.
In addition to the industrial cooperation, Nissan and Renault will also
cooperate in sales and administration.
With regard to sales, in Brazil, Nissan will develop its distribution
network by primarily selecting new dealers from the Renault network. The number
of Nissan outlets will increase to 120 in 2003. In Argentina, Nissan will add
to its current network selected new dealers from among local Renault dealers.
Back-office functions such as services, logistics and administration, based
on the Renault infrastructure, will be pooled between Renault and Nissan in
order to minimize costs and to make joint operations more productive and
efficient.
Nissan will establish a subsidiary in Brazil in 2000 initially to bear the
first new Frontier industrial investment. Later on, as from 2002, this
subsidiary will import and sell Nissan products in Brazil and export the ones
made in Brazil to neighboring countries.
The introduction of the Frontier and other new models to the Mercosur
market should allow Nissan sales in the region to reach at least 150,000
vehicles a year, or a minimum of 4 percent of the market by 2010.
For Nissan, this project marks the first significant market expansion
after the announcement of the Nissan Revival Plan last October.
"The Nissan Revival Plan is on track and now is the time to initiate growth.
I am pleased to announce today that the contribution from the Nissan Revival
Plan together with the Alliance with Renault enable us to increase our presence
in the Mercosur." said Carlos Ghosn, Chief Operating Officer of Nissan.
Renault implemented from 1995 an ambitious strategy of profitable growth
in the Mercosur. Using its long-established presence in Argentina as a
springboard, the company launched an offensive into Brazil, the continent's
biggest market. Renault is injecting US$ 1.5 billion (JPY 154.5 billion) from
1996 to 2001 into its strategy and is targeting sales of 320,000 vehicles a
year in 2005.
Renault's expansion in Mercosur is based upon a strong manufacturing
base, which will soon comprise four assembly and two powertrain facilities.
In Brazil, the ultra-modern manufacturing base in Sao Jose dos Pinhais,
Curitiba (Parana) currently consists of one assembly plant devoted to passenger
cars (capacity: 120,000 vehicles a year) and one engine plant (capacity: 280,000
engines a year). Another assembly plant will start its operations in 2001 and
will produce light commercial vehicles (capacity: 50,000 units a year). In an
initial phase, it will assemble the Renault Master and Nissan Frontier.
In Argentina, the recently modernized Cordoba plant assembles passenger
cars and light commercial vehicles (capacity: 130,000 units a year). Renault
also assembles vehicles in Uruguay and has a transmission plant in Chile.
Nissan's entry into the Mercosur backed by Renault's extensive industrial
and commercial resources will create 600 new directjobs and an estimated 3,000
indirect jobs.
MJR