Nissan's Strategy for Emerging Markets

Plans production capacity of two million by 2014-15 in China and in the Americas

2012/07/19

Summary

Nissan's Global Sales Reported below is an outline of Nissan's strategy for emerging markets, focused on production capacity expansion in these regions.

 Nissan Power 88, its new mid-term plan for the six years from FY2011 through FY2016, aims to raise both corporate operating profit and worldwide market share to 8% by FY2016. In FY2011, the first fiscal year, in spite of the strong yen and the two large-scale natural disasters, the OEM achieved the record high sales and growth worldwide, most notably in emerging markets. For FY2012, Nissan plans continuous growth in emerging markets with sales growth and production capacity expansion as its top priorities.

 Nissan aims to become the No.1 Asian brand in China, Russia, Brazil and some other countries and plans to vastly increase production facilities in the major emerging countries listed in the chart below.

 In FY2016, the last fiscal year of the mid-term plan, Nissan reportedly aims to sell 7.6 million units worldwide, based on the global demand forecast of 95 million units. It envisions to establish the global production operations capable of providing over 8 million units at the end of FY2016, while its capacity at the end of FY2011 was 5.4 million units. Nissan, therefore, says that it will develop new projects for facility expansion.

 Nissan plans to introduce the Venucia brand in China in 2012 and the Datsun brand in three countries including Indonesia in 2014 in order to enter the entry-price segment, into which it has not provided products.

Facility expansion plans in major emerging markets

Latin America  Construction of new plants: Mexico plant with annual production capacity of 175,000 units to be operational at the end of 2013 & Brazil plant with 200,000 units, early 2014. More than one million units/year to be produced in Mexico in the midterm.
 Total production capacity in the Americas to be increased to 2 million units in FY2014 from 1.2 million units in FY2011.
China  Production capacity at existing Huadu Plant and Xiangyang Plant increased. A new plant in Dalian with production capacity of 150,000 units to be built with scheduled opening in 2014. Production operations to be established to output a total of 2 million units/year in 2014 or 2015.
Russia  The Renault-Nissan Alliance will hold 50.01% stake in AvtoVAZ, the largest Russian OEM. The three OEMs will establish operations to output a total of 1.6 million units/year by 2016.
ASEAN
region
 Production capacity to be increased to 700,000 units in FY2016 from 385,000 units in FY2011.
 Production capacity in Indonesia to be increased to 250,000 units in 2014 from 50,000 units in early 2011.
Related reports: Beijing Motor Show 2012: Nissan's exhibits (July 2012)
Nissan's New Midterm Plan (August 2011)


Nissan will increase global sales by 11% y/y to 5.35 million units in FY2012.

 In FY2012, Nissan expects its global sales to mark a record high of 5.35 million units, up 11.0% y/y, supported by buoyant sales in China and other Asian countries.

 The FY2011 sales in emerging countries increased to 2.31 million units, which account for 47.6% of the global sales, from 1.28 million units (33.9%) in FY2007.

Global retail sales

(thousand units)
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
Forecast
Japan (including mini-cars) 740 721 612 630 600 655 690
North America including Mexico
(the U.S. only)
1,334
1,035
1,352
1,059
1,133
856
1,067
824
1,245
966
1,404
1,080
1,520
1,200
Europe 540 636 530 517 607 713 720
China 869 458 545 756 1,024 1,247 1,350
Others 603 591 545 709 826 1,070
Total 3,483 3,770 3,411 3,515 4,185 4,845 5,350
Note 1: Nissan's global market share in FY2012 is expected to be 6.7%, based on its expected global retail sales of 5.35 million units and the global demand of 79.7 million units. Its global share in FY2010 and FY2011 were 5.7% and 6.4% respectively.
Note 2: CY 2011 sales of the three partners, Nissan, Renault and AvtoVAZ, totaled 8.03 million units, the No. 3 in the world after GM and VW, exceeding 7.95 million units of the Toyota Group including Daihatsu and Hino.

Global production

(thousand units)
FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012
Forecast
Japan 1,192 1,263 1,050 1,025 1,073 1,199 1,225
North America including Mexico 1,123 1,151 868 837 1,073 1,221 1,410
Europe 507 594 450 445 571 647 680
Others
(China only)
445 650 716 975 1,433 1,730 2,065
1,330
Total 3,267 3,658 3,084 3,282 4,150 4,797 5,380

 

 



Latin America: Nissan will produce more than one million units annually in Mexico in the midterm.

Mexico: Over one million units to be manufactured annually in the midterm. Operations to be enhanced as an export base for all the Americas.

To manufacture
over 1 million units/
year in the midterm
 Nissan plans to enhance operations in Mexico as an export base for all the Americas. It will build a new plant in Aguascalientes as its third one in Mexico and manufacture over one million units/year in Mexico in the medium term.
 Nissan produces small cars at the existing Aguascalientes plant and small cars, LCVs and pickup trucks at the Cuernavaca plant. While the two plants' total production capacity is 600,000 units/year, Nissan manufactured a record high of 610,000 units in Mexico in 2011.
New Aguascalientes plant  Nissan plans to invest up to USD 2.0 billion to build a new plant in Aguascalientes. The investment amount includes the cost for future expansion. The site is 2.5 times as large as the existing plant in Aguascalientes. In the first phase, facilities to output 175,000 units /year will be completed to start operations at the end of 2013. The plant will be responsible for a part of Nissan's B platform car production in the Americas.
 A supplier park will be built at the new site. While the current local content ratio is already approximately 80%, Nissan will attract globally active suppliers to the park to raise it up to 85%. An on-site test track will also be constructed to allow for off-line quality assurance testing of new models.

Note: The production capacity of all the Americas will reach two million units/year when the new Brazil plant should become operational in FY2014, from 1.2 million units/year in FY2011.

Mexico: Sales and Export
Market share leader
in Mexico
 In Mexico, Nissan has been the market leader for three consecutive years and ended FY2011 with 235,000 units, which account for 25.3% market share. Nissan and its dealers will jointly invest USD 125 million through FY2013 to renovate and redecorate approximately 90% of all the 299 sales outlets; approximately 40% will be fully refurbished.
Exported 400,000 units
from Mexico
 In 2011, from Mexico to over 100 countries, Nissan exported approx. 400,000 units, 45,000 of which were exported to Brazil. For the three years from 2012 through 2014, the customs-free export quota from Mexico to Brazil will be reduced by up to 30% compared to the 2011 result. The Argentine government also announced in June 2012 that it should suspend the preferential tariff treatment for Mexico for three years. According to Nissan, these should not largely affect Nissan's production as it will take measures including exporting to other countries.

 

Brazil: New plant construction

New plant to start production in early 2014  Nissan announced in October 2011 plans to build a new plant in Brazil. It will invest BRL 2.6 billion (USD 1.5 billion) to establish the capacity to output 200,000 units/year. Production of the "V" platform products will commence in the first half of 2014 for sale in Brazil. Currently Nissan has its own capacity of 59,000 units/year at Renault's plant in Curitiba, which will continue to output Nissan cars after the new plant opening.
 Nissan aims to expand its market share in Brazil to 5% in the mid-term plan from 1.2% in FY2010. It also aims to raise the Nissan-Renault Alliance share to 10% soon. In FY2011 Nissan sold 81,000 units in Brazil, up 94.8% y/y and 226,000 units in South America, up 33.2% y/y.

 

 



China: Nissan plans to sell two million units in 2015


Venucia D50
Venucia D50, the first production model of Nissan's new brand in China, released in April 2012

 

Sales results and plans in China

(thousand units)
2008 2009 2010 2011 Jan.-Mar.
2012
2012
Forecast
2015
Plan
Nissan + Infiniti 379 546 713
DFL brand LCV 166 210 311
Nissan's sales volume in China 545 756 1,024 1,247 334 1,350 2,000
TIV: Passenger and LCV only 16,600 17,170
Market share 6.4% 6.0% 6.2% 7.3% 7.5%
Note 1: Dongfeng Motor Co., Ltd. (DFL), Nissan's joint venture in China, supplies a full lineup including Heavy- and medium-duty CVs. Nissan announces the combined unit sales of Nissan/Infiniti brands' passenger cars and Nissan/DFL brands' LCVs as Nissan's unit sales in China. The production volume also follows the same rule.
Note 2: In 2011, respective sales of five models, the Sunny, Teana, Sylphy, Qashqai and Tiida, exceeded 100,000 units.

 

Mid-term plan for China

DFL's mid-term plan  Dongfeng Motor Co., Ltd. (DFL), Nissan's joint venture in China, will make an additional investment of RMB 50 billion from 2011 through 2015 in order to increase DFL sales to more than 2.3 million units including over 2 million units of passenger cars and LCVs that Nissan announces as "Nissan's sales." Nissan aims to become the third after GM and VW in the passenger car business in China.

Venucia Brand
 In April 2012, Dongfeng Nissan launched the D50, the first production model of the Venucia brand exclusive to China. Another model will be released in fall. With Venucia models, Nissan plans to enter the four-million-units entry-level segment of the Chinese market. It aims to sell 300,000 units in 2015.
 The D50 was developed in China, based on the former Tiida. It is 4,480 mm long, powered by a 1.6-liter engine and produced at the Zhengzhou plant with a Chinese local suppliers' content ratio of 35%, raised from 5%. It is priced between RMB 67,800 and RMB 83,800.
 As of May 2012, there were 100 exclusive Venucia dealers, all of which were selected from existing Nissan dealers. By 2015, Nissan plans to increase Venucia dealers to 250. More than half will be located in growth-expected midcontinent provincial cities.

Plans for production capacity increase in China

Plants Timing Outline
Production capacity increase  Nissan announced plans to construct a new plant in Dalian, Northeast China. Although Nissan's production capacity as of 2012 year-end will be 1.2 million units on two shifts, it plans to output 1.33 million units in FY2012. It plans to manufacture more than two million units in 2014 or 2015.
 Nissan aims to achieve almost 100% local content ratio by 2015, while the current ratio is approximately 90%. It will therefore construct a new plant for powertrains including engines and transmissions.
The second Huadu Plant Completed in December 2011  In December 2011, the second facility in Huadu, Guangzhou was completed with investment of RMB 5 billion. With a production capacity of 270,000 units/year, it started manufacturing the Tiida from January 2012.
 The combined annual capacity in the Huadu district is now 600,000 units, which will be expanded to 670,000 units. The Huadu plants have become the largest operations of all the Nissan plants worldwide.
Xiangyang Plant Infiniti production to begin in 2014  Xiangyang Plant, Hubei Province manufactures the Teana and Murano. Nissan plans to invest additional RMB 2 billion (USD 315 million) to raise the production capacity to 250,000 units from current 130,000 units.
 Nissan announced that the plant should start production of two Infiniti models in 2014. The plant has facilities and management capability for luxury car production, according to Nissan.
Note 1: Infiniti brand opened its global headquarters in Hong Kong in May 2012, which consolidates product planning and marketing. According to Nissan, China should become the center of luxury brand car sales in the world.
Note 2: Nissan plans to increase sales of Infiniti cars in China to more than 100,000 units in 2016, from 19,000 units in 2011.
Dalian Plant Production scheduled for 2014  Nissan will invest RMB 5 billion to build a new plant in Dalian, Liaoning Province, announced in June 2012. With a production capacity of 150,000 units/year, the plant will start manufacturing Nissan brand passenger cars in 2014. The capacity will eventually be increased to 300,000 units.
 With Dalian Plant, Nissan will expand production facilities to Northeast China. As it will be close to Kyushu Plant, the OEM's largest production facility in Japan, Nissan plans mutual utilization of suppliers located in Kyushu region and Dalian between the two plants.

 

 



Russia: The Renault-Nissan Alliance to acquire over 50% stake of AvtoVAZ

Renault-Nissan Alliance Russian project

Midterm Plan  The 2011 aggregate sales of Renault, Nissan and AvtoVAZ in Russia were 879,000 units with market share of 29.9%, of which AvtoVAZ sold 637,000 units. By 2016 the three OEMs plan to establish an overall production capacity of 1.6 million units in Russia, including independent production by Renault and Nissan, and to raise the total market share to 40%.
To acquire 50.01% of AvtoVAZ stake, jointly with Renault  The Renault-Nissan Alliance will purchase AvtoVAZ, Russia's largest OEM. The memorandum of understanding was signed in May 2012. The parties will sign definitive agreements by the end of 2012.
 The Alliance and Russian Technologies State Corp., the government-owned investment company, will set up a joint venture that will control AvtoVAZ stakes. The joint venture will hold 74.5% of AvtoVAZ by 2014.
 Renault-Nissan will invest USD 750 million to hold 67.13% of the joint venture, which will give the Alliance 50.01% stake in AvtoVAZ. Respectively, Nissan will put in USD 450 million for 15% shares and Renault will stake additional USD 3 million for a total of 35.01% including 25% held since 2008.
To expand AvtoVAZ Togliatti Plant  Nissan, Renault and AvtoVAZ together invested EUR 400 million in AvtoVAZ Togliatti plant to establish an additional facility to output 350,000 units/year, which held an inauguration ceremony in April 2012. The total capacity of the plant has expanded to almost one million units.
 Production models of the new facility are from the three brands of AvtoVAZ Lada, Nissan and Renault. Nissan will also manufacture two models of the Datsun brand from 2014.
The Almera
exclusive to Russian market
 In late 2012 the new Togliatti facility will start manufacturing the Nissan Almera, developed exclusively for the Russian market. It has larger interior space than its competitors. Nissan will enter the compact car market, into which it has not provided products in Russia, with expectation that the model should greatly help raise the market share.
 The Almera has been developed exclusively for Russia, based on the second generation of the Bluebird Sylphy, which uses Nissan's B-platform, launched in Japan in 2005, according to news reports.

 

Nissan's independent project in Russia: St. Petersburg plant
Targeting 10% market share in the mid-term plan  In FY2011, sales in Russia increased by 57.3% y/y to 161,000 units and the market share expanded to 5.9% from 4.8% a year earlier. By 2016 Nissan plans to triple sales to 480,000 units and raise the market share to 10%.
 By FY2016, Nissan plans to locally manufacture 80% of the Nissan/Datsun brands' vehicles to be sold in Russia. It also plans to purchase 80% of parts and components in Russia in 2016, raised from 30 to 40% of 2012. Engines will be produced locally as well.
To increase St. Petersburg plant capacity  Nissan will make additional investment of EUR 167 million in the St. Petersburg plant, its 100% subsidiary, to double the production capacity to 100,000 units in 2014 and add stamping and resin production facilities. Its current products include the Teana, X-Trail and Murano. After the expansion works complete, the facility will be capable of manufacturing five different models on a single line. The next Qashqai for the Russian market will also be manufactured at the plant, while the present model is produced at the U.K. plant.

 

 



ASEAN region: Nissan to sell 500,000 units in FY2016, with market share of 15%.

Establishing a regional headquarters in Thailand and accelerating localization of R&D

Plans to sell 500,000 units in FY2016  Nissan plans to boost sales in the ASEAN markets to 500,000 units with the market share of 15%, from 150,000 units (6%) in FY2010 and 176,000 units (6.9%) in FY2011. In order to achieve the target, it will launch by FY2016 a total of 10 models appropriate to each market, mainly in Thailand, Indonesia, Malaysia, the Philippines and Vietnam, according to Nissan's announcement in July 2012.
Four pillars in ASEAN mid-term plan <1> Introducing a model compliant with Indonesia's "low cost green car program" under the Datsun brand ahead of other OEMs.
<2> Accelerating localization of R&D and powertrain production: R&D operations in Thailand and Indonesia will increase engineering staff from 120 in FY2010 to 370 in FY2016. JATCO Ltd. will produce CVTs in Thailand.
<3> Doubling regional production capacity: From 385,000 units/year in FY2011 to 700,000 units/year in FY2016.
<4> Established Nissan Motor Asia Pacific Co., Ltd. (NMAP) in Thailand as regional headquarters for the ASEAN region in July 2011.

 

Thailand: Targeting 15% market share for FY2016

The March and the Almera contributed to sales  Nissan launched the March in Thai eco-car market in March 2010, ahead of other Japanese OEMs. It added the Almera V-platform sedan in October 2011.
To enhance sedan and pickup lineup  Sales expanded to 77,000 units with 9.2% market share in FY2011, from 34,000 units with 5.7% in FY2009 and 65,000 units with 7.4% in FY2010. Nissan aims to raise the market share to 15% in FY2016 by enhancing the lineup of sedans and pickups.
Indonesia: To increase production capacity to 250,000 units.
Strengthening the MPV lineup  In FY2011, Nissan sold 60,400 units, up 41.8% y/y. In June 2012, it introduced the Evalia, a 7-seater minivan produced in Indonesia. The model, based on the NV200 Vanette, is positioned one rank lower than the Grand Livina to compete with best-selling Toyota Avanza and Daihatsu Xenia.
 In FY2012, additional models including the Elgrand and the Serena will be launched to strengthen the MPV lineup in an aim to achieve 90,000 unit sales with 10% market share.
To introduce a low cost green car under the Datsun brand  The Indonesian market has become the largest in ASEAN in 2011 with the overall demand of 910,000 units, overtaking Thailand, which suffered the flooding. Nissan expects the market to be doubled in FY2016 once the Indonesian government's "low cost green car program" becomes effective. Although the program has not been formalized yet as of July 2012, 20 km/L fuel consumption and the price of 8,000 Rp. are expected to be standards.
 Currently there is no car priced under USD 10,000 in Indonesia, unlike India. Nissan plans to develop and launch a Datsun brand low cost green car in 2014 to create a new market.
Production capacity expansion  In September 2011, Nissan doubled production capacity of the Indonesian plant from 50,000 units to 100,000 units. In addition, it will make 33 billion yen investment in order to strengthen the lineup as well as to increase production capacity to 250,000 units a year by 2014. (Announced in March 2012.)

 

 



Datsun brand cars will be introduced in three emerging countries in 2014

Nissan to introduce Datsun brand cars into the entry-price segment of emerging markets.

 Nissan plans to develop new entry-price models under the "Datsun brand" and to launch them first in 2014 in India, Indonesia and Russia. It will address the needs of people in emerging markets, for "people who would love to own a car but cannot afford it because those on the market are too expensive." Nissan does not provide products in this segment at present. Prices and specifications have not been revealed, as they should vary depending on market needs, according to Nissan.
 Nissan aims to develop the Datsun brand to a 300,000-unit level worldwide at an early date. It expects the new segment created by the Datsun brand in Indonesia to account for 40% of the overall demand in 2016. In Russia, the OEM expects the Datsun brand models to account for 30% of all the Nissan car sales. In India, the Datsun brand is expected to account for approx. 50% of Nissan car sales.
 For Indonesia and India, Datsun brand models will be developed based on Nissan's V-platform. In Russia, Nissan plans to use platforms from AvtoVAZ, to be acquired jointly with Renault, and the Datsun models, to be powered by about 800-cc engines, will be built at AvtoVAZ' Togliatti facility. In each of these three countries, two models will be launched in the first year and another will be added in three years.

Note: For the ultra-low cost project with India's Bajaj Auto Ltd., Nissan is developing various prototypes. Nissan says that it will make different proposals for the Datsun brand from those for the Bajaj project.


(References) News releases by Nissan Motor Co., Ltd. and Renault S.A. as well as news reports.

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