NASHVILLE -- Headlines were buzzing last week about Nissan Motor Co.'s plan to invest $1.4 billion to build a big new auto plant in Brazil.
Busy American auto industry players were free to shrug off the development. Brazil's a nice place -- but it ain't Main Street USA. What matters here is what a car company, Nissan or otherwise, does in this market.
But here's why Nissan's plan does matter. A new plant in Brazil opens up new product options in the U.S. market.
Nissan's U.S. operations are in growth mode, unlike those of some of its U.S. competitors, and not exactly swimming in spare assembly lines to build more vehicles when the market asks for them.
The rule of thumb for the Detroit 3 essentially is: Find me the right product and don't worry about the assembly line. There's an available one around here somewhere.
Not so for Nissan, or Toyota or Honda, for that matter. Especially since the soaring Japanese yen has pretty much knocked Japanese factories off their consideration lists. More than ever, they will focus on their NAFTA-region factories for resources, and there just aren't that many of those to get the job done.
So follow the logic of Nissan's thinking:
First, Brazil has been a quandary for Nissan for a while. The company is doing good to great in almost every market in the Americas -- except Brazil. In order to be competitive there, Nissan needs to build locally. Until now, Nissan has been relying on imports into Brazil, including imports from Nissan's factories in Mexico.
So by spending big on a new plant in Brazil, Nissan can throttle back on the Mexican production capacity it previously had earmarked for Brazil.
That, in turn, frees up capacity to use elsewhere -- elsewhere as in Main Street USA. New plant capacity translates into new products. Maybe it won't be a new product out of Mexico. Just as easily, Nissan might transplant a model it makes in Tennessee or Mississippi down to the newly available Mexican capacity, thereby freeing up an assembly line in the United States for this hypothetical product.
What might such a new Nissan, or Infiniti, product be? Who knows? But the end result is clear -- at least now it will be possible to building something closer to U.S. dealers.