TOKYO -- Nissan Motor Co.'s passenger car sales in China will likely exceed a target of 140,000 units this year but truck demand for its local company could fall behind plans, the head of the joint venture said on Monday.
"We had set an aggressive target for passenger cars, but sales in 2005 look set to exceed it," Katsumi Nakamura, president of Dongfeng Motor Co., told reporters in Tokyo. "But there is some risk for trucks, so the company's overall sales are in line with the target of 410,000 units," he said.
Dongfeng Motor Co., a 50-50 joint venture between Nissan and Dongfeng Motor Corp., China's third-biggest automaker, sells passenger cars under the Nissan brand and big trucks, buses and other commercial vehicles under the Dongfeng brand.
Nakamura said car sales from January to September jumped 168 percent to 111,700 units thanks to brisk sales of the Tiida compact model launched in April and the Teana high-end sedan out late last year. By the end of this year, Nissan is also scheduled to launch the Quest minivan and Fuga luxury sedan.
But sales of mid-sized and large commercial vehicles fell 17 percent to 126,000 units in the first nine months, as the segment shrank 65 percent in the latest quarter, Nakamura said.
"The market for trucks is very tough," he said.
Also posing difficulty was a price war raging in China as overcapacity and the launch of more new models pressure carmakers to reduce selling prices and hence margins, he said.
"Back in 2003 we thought it would take until 2006 for car prices in China to come down to global levels, but this ended up happening in 2004," Nakamura said.
To cope with this and margin pressures from a rise in raw materials prices, Nakamura said Nissan planned to procure as many car parts locally, bringing down production costs.
With a new engine factory due to start in early 2006, Nakamura said Dongfeng Motor's local purchasing rate for cars would climb above 70 percent from less than 60 percent now.
"We'll aim to raise this as much as possible," he said.
That was essential because the new wave of car demand, which Nakamura expects to grow by about 10 percent annually until 2015 or so, would come in the cheaper compact segment for cars costing approximately 100,000 yuan ($12,390), he said.
"To compete in the Tiida class, a local procurement rate of at least 70 percent is a must."
Like many rivals, Nissan, owned 44 percent by France's Renault SA, considers China a crucial market, and is counting on it to help meet a goal of selling 4.2 million vehicles in the 12 months to March 2009.
Nakamura reiterated Dongfeng's stance that it had no plans to export passenger cars before 2007, adding that no decision had been made for plans beyond that date.