Ghosn says Renault could join Nissan, Dongfeng JV in China

[NINETY EIGHT REGENCY]

Ghosn says Renault could join Nissan, Dongfeng JV in China

September 20, 2010 08:46 CET

ZHENGZHOU, China (Reuters) -- Renault SA, the controlling shareholder of Japan's Nissan Motor Co., has no plans to start its own production in China, the world's largest auto market, its CEO said on Monday.

However, the French auto maker could someday join Nissan's joint venture with Dongfeng Motor Group Co., CEO Carlos Ghosn told reporters.

Ghosn, who is also the CEO of Nissan, made the remarks in a news conference following the opening ceremony for Dongfeng-Nissan's new SUV plant.

Nissan plans to double its capacity in China by 2012, joining a host of peers that have made similar recent moves to capture a bigger slice of the world's biggest auto market.

Nissan's new plan, which would see its annual capacity rise to 1.2 million units, exceeds the company's earlier target by 20 percent, underscoring its strong interest in China -- a rare bright spot for automakers as the global industry struggles to emerge from a sharp downturn.

Nissan would like to eventually take 10 percent of the China market, nearly double its current share of about 6 percent, Ghosn said at an event in the central China city of Zhengzhou.

"Among the Japanese carmakers ... Nissan holds the No. 1 position," he said. "Still, we believe we have the potential to earn a higher market share through our partnerships with Dongfeng and Zhengzhou Nissan."

Race to add capacity

Nissan's announcement is the latest of a raft of similar plans by foreign auto makers looking to expand their China output to capitalize on the market's rapid growth.

General Motors Co., which operates auto ventures with major Chinese auto groups SAIC Motor Corp. and FAW Group Corp., said last week that it sees the need to continue growing capacity at its China joint ventures.

Korea's Hyundai Motor Co. is building a third plant in China, boosting its total production capacity in the country by two-thirds to 1 million units.

Nissan is the top Japanese automaker in China, overtaking Toyota Motor Corp., thanks to a model lineup that included small cars that met the government's tax incentives.

But it has been lagging the market's growth recently due to a shortage of capacity, and officials have welcomed a slight slowdown in the market's sale for that reason.

Ghosn also told reporters that Nissan was expanding its other two production bases in China, in the cities of Huadu and Xiangfan, in addition to the new plant in Zhengzhou.

China's vehicle sales jumped nearly 48 percent in the first half of 2010 but analysts and automakers say the growth is expected to return to normal after the breakneck speed in the past year fueled by the government's stimulus.

China's car sales in August rose nearly 60 percent from a year earlier, bouncing back strongly after sluggish sales in the summer months with help from central government subsidies for fuel-efficient models.

Nissan said the new Zhengzhou SUV plant has total investment of 1 billion yuan ($148.7 million), and will be run by Zhengzhou Nissan Co. Ltd., a joint venture between Nissan and Dongfeng.

The new plant would have an annual capacity of 180,000 units and together with Zhengzhou Nissan's first plant, the company's total production volume would reach 240,000 units by 2012 after the expansion, Zhengzhou-Nissan said in a statement.

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