DETROIT - Nissan Motor Co. wants to continue growing in North America. But unlike its two chief Japanese rivals, it won't expand by producing in Canada.
Honda Motor Co. and Toyota Motor Corp. have invested heavily in Canadian assembly operations. Honda builds its Honda Odyssey minivan, Civic and Acura EL in Alliston, Ontario, and will soon add a new sport-utility. Toyota produces the Corolla and Camry Solara in Cambridge, Ontario, and has considered adding the RAV4.
Honda produced 210,258 cars and trucks in Canada last year, while Toyota built 271,949 cars.
But Nissan has nothing to gain from Canadian manufacturing, says COO Carlos Ghosn. There is 'no fundamental reason why we would manufacture a car in Canada,' Ghosn told a group of reporters this month at the North American International Auto Show in Detroit.
He said that as Nissan considers future production expansion in North America, the choice will be between the United States and Mexico.
Nissan is carefully watching the Mexican market because its competitors are making significant investments there, he said, but 'the logical presence would be the U.S.'
Last month, Nissan's controlling shareholder, Renault SA of France, announced it would re-enter the Mexican market by investing $400 million to put new vehicles into production at an underused Nissan factory there.
Shortly after, Volkswagen AG also revealed plans to invest in more Mexican production, committing about $1 billion to expand its Puebla plant.
Nissan produces the Sentra in Aguascalientes for the U.S. market. But most of its Mexican capacity - for Nissan and Renault - is intended for Mexico and Latin America.
Meanwhile, Nissan's U.S. production center in Smyrna, Tenn., remains the bulwark of Nissan's U.S. sales. That plant produces the Altima, Frontier and Xterra, and will probably also produce the next generation Maxima.
The question of where to expand is almost academic at the moment, because Nissan is struggling to put its house in order. Faced with restoring the money-losing Japanese automaker to profitability, Ghosn announced last fall that he would close down excess factory capacity in Japan.
Even in North America, Nissan's Mexico plants have been underused in recent years. Two years ago, the Tennessee plant had to cut back production.
But the production outlook appears to be changing rapidly with Renault's involvement. Renault and Nissan are exploring product-sharing ideas. They will co-produce a car in Mexico. And Renault has expressed an interest in obtaining a version of the hot-selling Xterra.
Nissan is running overtime to fill Xterra orders, and dealers are selling the sport-utility for as much as $4,000 over sticker price.
It seems clear that Renault and Ghosn have additional plans for Nissan's North American production.
Nissan's preference for Mexico over Canada goes back more than 30 years. Nissan began producing vehicles in Mexico in the 1960s.
By contrast, while Toyota produces autos and wheels in Canada, it has remained out of the Mexican market.