AGUASCALIENTES, Mexico -- Train cars are standing by to begin shipping Sentras to U.S. retailers from Nissan's newest auto assembly plant, which opens here today.
Nissan has spent $2 billion on the plant -- one of the largest amounts ever spent on a factory of any kind in Mexico -- in hopes of capitalizing on growing U.S. market demand for fuel-efficient small vehicles.
The first new Sentra rolled off the Aguascalientes assembly line on Nov. 7, but Nissan CEO Carlos Ghosn and Mexico President Peña Nieto will declare the big project up and running at a public event here today. Nissan intends to ramp the plant up quickly, reaching full production of 175,000 Sentras annually by the end of next March.
Nissan will be producing 1 million cars in Mexico by 2016, cementing Mexico's position as export hub for Nissan in the Americas, Ghosn told Reuters today as he inaugurated the plant. Most of the cars from the new plant in Aguascalientes in central Mexico will be sent by rail to destinations throughout the Americas.
A staff of 3,000 people in the light, airy plant filled with rows of shiny yellow robots will produce one car every 38 seconds, in partnership with Nissan's other Aguascalientes plant.
"We like Mexico because it allows us to be competitive," Ghosn said in an interview at the plant. "It's not only about cost, it's also about quality and it's about responsiveness -- capacity to respond to variation of the market very quickly."
"Mexico is becoming the export hub for the Americas - not only North America but also South America."
U.S. market share
In the United States, small cars are a key piece of the Nissan group's campaign to increase its market share to 10 percent by March 31, 2017 -- up from 8 percent currently.
But like many automakers, Nissan has simply not had adequate North American factory space and manpower to fully take advantage of America's 5-year-old shift to fuel-efficient B- and C-segment small cars. This year has seen Nissan actually holding back on advertising its newly designed Sentra, simply because U.S. dealers have not been able to stock enough of them.
"Our dealers haven't been able to get all the cars they need," says Jose Munoz, Nissan's newly promoted head of North American operations, effective Jan. 1, as he traveled to the plant opening. "This is going to change things for us."
Nissan sold 106,680 Sentras in the first 10 months of this year, up 17 percent from a year earlier. But Nissan believes Sentra ought to be able to give its compact rivals, the Toyota Corolla and Honda Civic, more of a run for their money. Those models sell at more than twice the volume.
But factory capacity has been part of the challenge. Retailers are also hungry for Nissan's B-segment Versa and Versa Note. Until now, both the Versa and Sentra have come from a single Mexico plant -- also in Aguascalientes -- that had the additional burden of supplying small cars to dealers in Brazil.
Once Sentras start coming out of the new Aguascalientes plant, Nissan can begin producing more U.S.-bound Versas at the older plant. And early next year, Nissan will cut back its car shipments to Brazil when a new factory launches there.
The automaker also recently added Sentra production to its underutilized assembly plant in Canton, Miss. That line could deliver as many as 50,000 Sentras a year to U.S. dealers, on top of the new Mexican source.
Nissan remains mum about its longer-term plans for the new Aguascalientes auto plant. Considering its hefty price tag, there are certain to be other vehicles added to the mission.
A model of the factory on display inside its new visitor's lobby shows large areas of the property marked off for future expansion plans.
Nissan officials declined to comment on speculation that Aguascalientes will be expanded to build a new small entry-level luxury car that will be shared by Infiniti and Nissan's global technology partner, Daimler.
"It's capable of doing four different cars on four different platforms, so we have a lot of flexibility," said Ghosn, referring to the new plant which was built in a record 19 months.
That move wouldn't help Nissan-brand dealers in their fight against Toyota and Honda. But it would serve Nissan's corporate strategy of building more small cars to boost total U.S. market share.
Reuters contributed to this report.