SHANGHAI -- Nissan Motor Co.'s Chinese venture more than doubled car sales in the first half of 2005 to become the nation's fastest-growing auto producer, and is banking on new models to help it meet this year's target.
China, once an easy profit center providing global carmakers with double-digit margins, has become one of the industry's most intense battlegrounds with foreign auto makers investing $15 billion to triple capacity to over 7 million cars by 2008 -- sparking fears of an impending glut.
The market's heady pace of expansion has slowed sharply with car sales growing just 15 percent last year after doubling in 2003. Nissan's venture, Dongfeng Motor Co., now intends to introduce new models to pique buyers' interest.
"Judging by our sales growth in the first half, we became the fastest-growing auto maker in China during that period," said a senior executive at the venture, who declined to be identified.
"In the latter half of the year, we plan to launch a new model, which we expect to be quite popular."
Dongfeng Motor Co., a 50-50 joint venture between Japan's second-largest auto maker and China's Dongfeng Motor Corp., said on Monday it sold 66,476 cars from January to June, versus 27,204 units in the same period of 2004.
The executive told Reuters it was sticking to a target announced in March to move 140,000 Nissan-branded passenger vehicles in 2005 despite selling less than half of the annual goal in the first half.
In 2004, Dongfeng Motor Co. undershot a target of selling 80,000 units, when it moved fewer than 61,000 cars.
Some auto makers are betting on a second-half pick-up of the world's third-largest vehicle market, after a growth slowdown last year hammered profit margins.
Last week, France's PSA Peugeot Citroen, Europe's second-biggest carmaker, raised its 2005 China unit sales target by 17 percent.
Overall car sales in the country had risen 22 percent in May, according to official data. Analysts said growth in the market has accelerated in past months, auguring well for the second half of 2005.
Longer term, Nissan's Chinese sales are forecast to exceed 500,000 vehicles by 2007/08, with contribution from Dongfeng Motor Co. China would then be the Japanese firm's third-biggest market, behind the United States and Japan.
Last year, its Chinese venture posted an operating profit of 2.5 billion yuan ($302 million) on a margin of 5.7 percent.
Nissan's venture has said it expected a similar pace of growth in the market in 2005 as compared with 2004, with pressure on prices remaining, led by General Motors, Volkswagen A.G. and Hyundai Motor Co.
Late last year, Nissan -- 44-percent owned by France's Renault SA -- added the high-end Teana sedan to a car line-up for China that consisted of the Sunny and Bluebird.
And in April, it launched the Tiida compact sedan, part of a plan to unveil five new models this year in the country.
"We plan to launch a Tiida variant in the second half, which should help us meet our full-year target," the executive said.
The Japanese giant has also said it will introduce its luxury Infiniti brand in China, where it expects most of its growth to come from over the next three years, but did not specify a timeframe.
Dongfeng Motor Co. sells passenger cars under the Nissan banner and commercial vehicles under the brand of Dongfeng, a state-controlled producer of cars and commercial vehicles.