Nissan Expects to Build U.S. Plant -- WSJ

By FeaturesDow Jones Newswires

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 17, 2018).

DETROIT -- Nissan Motor Co.'s chief executive said the company believes it will need to build a new plant in the U.S. in four or five years, when the car maker would be ready for another push to expand.

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Normally, that plant would be built in any of the Nafta countries, "but in the current situation we are more inclined to invest in the U.S.," said Hiroto Saikawa, Nissan's chief executive, at the Detroit auto show.

President Donald Trump has pressured Japanese auto makers to build factories in the U.S. Last year, Mr. Trump tweeted "no way" to Toyota Motor Corp.'s plants to import Corollas to the U.S. from an under-construction plant in Guanajuato, Mexico.

Last week, Toyota Motor Corp. and Mazda Motor Corp. said they would build a $1.6 billion plant in Huntsville, Ala. Toyota's plant in Guanajuato will produce Tacoma pickup trucks, while the Alabama plant will focus on passenger cars.

Nissan's plan comes as it eases off the U.S. market after years of rapid expansion. Sales have grown to around 1.5 million units, from one million units in 2011. That growth helped Nissan hit, and exceed, its target for U.S. market share, but it came at the expense of its profit goals.

"Now it is time for us to improve quality of sales, rather than stretching volume. We have been hit with a deterioration of profitability from the U.S.," Mr. Saikawa said.

Nissan has become increasingly reliant on the U.S. North America once accounted for 30% of Nissan's profits. "Now 50% is dependent on the U.S.," said Jose Munoz, Nissan's chief performance officer.

The company is paying the price for being overly optimistic in its predictions for the U.S. car market this year. Nissan ran its plants at full tilt only to be hit by a sharp slowdown in car buying over the summer.

The company's hopes to trim incentive spending and refresh its aging passenger car lineup over the next few years to shore up its U.S. business. Carlos Ghosn, who heads the alliance between Nissan, Renault SA and Mitsubishi Motors Corp., aims to hit a combined sales target of 14 million in 2022 for the three companies.

Mr. Saikawa isn't quite sure how they're going to get there just yet. "We still need to brush up our plan. We are almost halfway finished with this sustainable growth plan," he said.

On China, Nissan leadership is more sanguine. The company sells about the same number of vehicles there as it does in the U.S., but it plans to ramp up sales by an additional 1 million -- even at the expense of profitability.

"We are strategically aggressive [in China], because now is time for us to secure the battlefield for the future," Mr. Saikawa said.

Write to Sean McLain at sean.mclain@wsj.com

(END) Dow Jones Newswires

January 17, 2018 02:47 ET (07:47 GMT)

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