Nissan to build $2 billion plant in Mexico
Initial annual output targeted at 175,000 units
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NASHVILLE -- Nissan Motor Co. will build a $2 billion auto assembly plant in Mexico -- its third in that country -- as it works to outgun rival Honda Motor Co.
The plant, in Aguascalientes, Mexico, will have initial capacity to build 175,000 light vehicles annually for the United States, Mexico and Latin America, with plans to expand. Production is scheduled to begin by the end of next year.
Nissan did not specify what model will be produced at the plant initially, but one company executive described it as "an existing B-segment nameplate that is currently in short supply." That description suggests the subcompact Versa, which already is built at an existing Nissan plant in Aguascalientes and sold in the United States and other markets.
Models will be added as capacity is increased at the new plant. Nissan's other Mexican plant is in Cuernavaca. A redesigned Versa sedan was launched last fall and has been exceeding sales expectations.
Ambitious goals
But Nissan -- which enjoyed a 15 percent increase in U.S. sales and grabbed 8.2 percent of the U.S. market in 2011 -- has bigger ambitions.
It hopes to capture 10 percent of the U.S. market; outsell the Honda brand for the first time; move more vehicle production out of Japan to North America; and become the dominant Japanese automaker in Latin America.
To do all that, it needs more factory space.
Nissan produced 1.18 million light vehicles in North America last year, up 16 percent from 2010 and enough to edge the output of rivals Honda and Toyota.
Today's announcement represents an aggressive step forward by Nissan. Big auto assembly plants routinely cost about $1 billion -- Nissan is planning to spend twice that much in Aguascalientes, and to spend it fast.
According to the timetable, Nissan will move from groundbreaking to commercial production by the end of 2013 -- or less than 23 months.
Nissan is beginning to strain under its existing U.S. plants. Just four years ago its two factories in Smyrna, Tenn., and Canton, Miss., were underutilized and Nissan was reducing U.S. head count.
That situation is now reversed: The Mississippi plant is now building the Altima model on three shifts, and the company has been hiring hundreds of workers in Smyrna to keep pace with rising output. The Smyrna site is also adding three new models; the all-electric Leaf, the Rogue crossover and the new Infiniti JX crossover.
Nissan is also maxed out on the capacity of its two large assembly plants in Mexico, says Bill Krueger, vice chairman of Nissan Americas, who was scheduled to announce plans for the new plant in Mexico today.
Strong yen shapes plans
Adding urgency to the situation, Nissan CEO Carlos Ghosn has virtually blackballed any idea of shipping more Japanese-made vehicles to the United States because of the strong Japanese yen. According to Ghosn, the yen has simply made Japanese-built vehicles uncompetitive outside of Japan.
So Nissan and other Japanese automakers are scrambling as they have not done since the 1980s to shift output outside of Japan to North American and other regions.
Honda and Mazda Motor Corp. also are building assembling plants in Mexico.
Nissan officials are calling their new Aguascalientes plant "Phase 1," and readily indicate that its output will increase. Nissan's longer range plan is to put more models into production there, possibly including a vehicle that Nissan will share with Germany's Daimler AG at a later date.
Nissan and Daimler announced in early January that they will share a four-cylinder engine that Nissan will begin producing at its engine plant in Decherd, Tenn. But those engines are for other vehicles.
The Mexico project includes plans for a large supplier park that will serve both the new and existing Aguascalientes plants, which will separated by a 10-minute drive.
Nissan has not indicated where it will obtain the engines to support the additional vehicle production in Aguascalientes. But it is unlikely to import engines from Japan because of the strong yen.
Whatever it does, Nissan wants to move quickly, seizing on the unexpected U.S. market success it enjoyed in 2011.
While Nissan's bigger rivals Honda and Toyota struggled to bounce back from the March 2011 Japanese earthquake and tsunami, which crippled output, Nissan had more ample vehicle inventories and posted higher U.S. sales for the year.
Nissan closed the sales gap with the rival Honda brand in the process. Its Nissan and Infiniti models trailed Honda/Acura by more than 320,000 sales in 2010; last year, the gap was less than 105,000.
Along the way, Nissan North America’s share of U.S. sales rose 0.4 points to 8.2 percent. American Honda’s share dropped 1.6 points to 9 percent.
PRESS RELEASE: NISSAN TO BUILD NEW, $2.0 BILLION MANUFACTURING COMPLEX IN AGUASCALIENTES, MEXICO, GROW CAPACITY IN THE AMERICAS
Phase I to enable 175,000 units of small car production capacity in the Americas –
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3,000 direct and up to 9,000 indirect positions will be created in the community –
MEXICO CITY (Jan. 25, 2012) – Nissan Motor Co., Ltd. today announced plans to invest up to $2.0 billion USD for an all-new manufacturing complex in Aguascalientes, Mexico, to support the company's Americas growth strategy. The facility, which will complement Nissan's two existing Mexican factories, is scheduled to begin operations in late 2013. During the initial phase of its development, the new complex will support production of up to 175,000 units annually of Nissan's 'B' platform products. Further expansion of the site will be considered in phases as product and capacity needs are formalized.
The new complex in Aguascalientes will allow Nissan's existing and future operations to share critical resources. An all-new supplier park also will be built on the site.
Up to 3,000 direct jobs will be created initially at the new facility, with approximately 9,000 positions to be generated within the supply chain and wider community. With these additional jobs, Nissan's total headcount in Mexico will expand to nearly 13,500.
"Mexico is a key engine for Nissan's growth in the Americas," said Carlos Ghosn, chairman and chief executive officer, Nissan Motor Co, Ltd. "Together with our new plant in Brazil, this new manufacturing facility in Aguascalientes is an important pillar in our strategy to ensure that Nissan has the capacity it needs to increase sales volume and market share across the Americas."
Investment in Aguascalientes
Nissan's $2.0 billion USD investment will support development of the site in Aguascalientes – Nissan's third in Mexico – and will lay the groundwork for the facility to expand in the future. While other Mexican locations were considered, the State of Aguascalientes was chosen for its proximity to Nissan's existing manufacturing plant in the same state, which offers direct access to skilled labor and suppliers.
The addition of an incremental production site in Aguascalientes will prepare Nissan to produce more than one million units annually in Mexico in the midterm. Today, Nissan operates two manufacturing facilities in Mexico – one 85 km south of Mexico City in Cuernavaca that produces small cars and light commercial and pickup truck models, and a second in Aguascalientes that produces small cars for the domestic, U.S. and Latin American markets. In 2011, Nissan set a domestic production record with more than 600,000 vehicles manufactured at its Mexican plants.
"In Aguascalientes, we reciprocate the trust that Nissan has deposited in our State for 30 years with work, dedication and effort," said Carlos Lozano de la Torre, Governor of the State of Aguascalientes, Mexico. "During this new stage, we are solidifying our friendship, which will translate into success for this great global company and a more international profile for Mexicoand better quality of life for the people of Aguascalientes thanks to new employment and wealth. We would like to extend our gratitude to Carlos Ghosn and the great Nissan family for extending their support, so that Nissan's new manufacturing complex could become a reality here in our home and their home."
The first phase of development for the new Aguascalientes site will include installation of body, trim and chassis and paint manufacturing capability as well as associated parts warehousing and logistics operations. An on-site test track also will be constructed to allow for off-line quality assurance testing of all new-model production.
"No other automaker is investing in Mexico more than Nissan," said Jose Munoz, president and general director, Nissan Mexico. "Nissan's investment in new manufacturing, engineering and technology resources in Aguascalientes validates what thousands of our employees, suppliers and customers already know. Behind our market leadership is an unparalleled commitment to deliver the best vehicles for Mexico and more than 100 international markets."
Growing capacity to support Americas' market expansion
Nissan's expansion in Mexico follows the company's recent announcement that it will build an all-new manufacturing facility in Resende in the Brazilian state of Rio de Janeiro. That factory will begin production in the first half of 2014 and, together with the newly installed capacity in Mexico, will provide Nissan with the capacity to fuel its growth throughout the Americas region.
In 2011, Nissan's sales outpaced the Americas automotive industry, rising 17.2 percent to 1,561,230 units. This gain moved Nissan into the No. 2 ranking among Asian brands in the Americas with an overall market share of 7.5 percent, up from 7.0 percent one year earlier and 6.6 percent in 2009.
In the U.S., Nissan has gained market share for six consecutive years, ending 2011 with 8.2 percent of the U.S. market, up from 6 percent just a few years ago. In Mexico, Nissan has been the market leader for three consecutive years and ended 2011 with a record market share of 24.8 percent. In Brazil, Nissan's business has been rapidly expanding with sales that nearly doubled in 2011. Nissan was Brazil's fastest-growing automotive brand in 2011 and is now the 7th best-selling car brand in the country. In Latin America, Nissan finished 2011 with 10 percent market share, up 0.4 points from the year prior.
Nissan in Mexico
For more than 50 years Nissan has built an increasing presence in Mexico. Today, six of the ten most popular vehicles sold in Mexico are Nissan models. In 2011, the company sold 224,509 units in Mexico, an increase of 18.5 percent over the previous year, and Nissan Mexicana's 2011 market share of 24.8 percent has never been surpassed by any automotive brand in more than two decades.
The company, headquartered in Mexico City, operates corporate, marketing, sales, manufacturing, distribution and design facilities throughout the country including in the cities ofAguascalientes, Distrito Federal, Cuernavaca and Toluca.
Nissan's Mexican production includes the March, Sentra, Versa, Tiida, the historically popularTsuru, as well as the NP300 light trucks. Seventy percent of production is exported to 100 international markets. Approximately, 80 percent of vehicle content is made in Mexico. The company currently sells 22 vehicle nameplates in Mexico from its global vehicle portfolio.
About Nissan Americas
In the Americas, Nissan's operations include automotive styling, engineering, consumer and corporate financing, sales and marketing, distribution and manufacturing. Nissan is dedicated to improving the environment under the Nissan Green Program 2010 and has been recognized as a 2010 ENERGY STAR® Partner of the Year by the U.S Environmental Protection Agency. More information on Nissan in North America, the Nissan LEAF and zero emissions can be found atwww.nissanusa.com.
About Nissan Motor Co.
Nissan Motor Co., Ltd. Japan's second-largest automotive company in terms of volume, is headquartered in Yokohama, Japan, and is part of the Renault-Nissan Alliance. Operating with more than 248,000 employees globally, Nissan sold more than 4.1 million vehicles in 2010, generating revenue of ¥8.77 trillion (US$ 102.37 billion). With a strong commitment to developing exciting and innovative products for everyone, Nissan delivers a comprehensive range of 64 models under the Nissan and Infiniti brands A pioneer in zero-emission mobility, Nissan made history with the introduction of the Nissan LEAF, the first affordable, mass-market, pure-electric vehicle and winner of numerous international wards, including the prestigious 2011 European Car of the Year and 2011 World Car of the Year.
For more information about our products, services and commitment to sustainable mobility, visit our website: http://www.nissan-global.com/EN/.
You can reach Lindsay Chappell at lchappell@crain.com.
