Nissan to Spend $1.4B on New Factory in Brazil

Japanese automaker Nissan Motor Co, Ltd said it would invest 2.6 billion reais ($1.42 billion) to build a new factory in Brazil as it aims to triple its market share in Latin America's largest economy by 2016.

The new production center, in Resende in Rio de Janeiro state, will have the capacity to produce 200,000 vehicles annually when it starts operating in the first half of 2014, Nissan Chief Executive Carlos Ghosn announced on Thursday at an event in Rio.

Ghosn, a Brazilian who also heads the Renault-Nissan partnership, made the announcement a day after unveiling a 500 million reais ($274 million) plan to expand the production of French automaker Renault's cars at an existing factory in the southern state of Parana.

``Just as Nissan has demonstrated in China, Russia and India, we are investing in the regions with the most potential for growth,'' Ghosn said.

The announcement comes less than a month after Brazil's government raised a key tax on automakers in an attempt to discourage imports and stimulate domestic production and jobs.

Ghosn said the new plant, the first dedicated Nissan factory in Brazil, will create 2,000 direct jobs and will produce Nissan's ``V platform'' of cars, including the compact March model.

Nissan aims to raise its share of sales in Brazil's fiercely competitive auto market to 5 percent by 2016 from 1.7 percent this year. Renault, which currently ranks fifth among carmakers in Brazil with a 5 percent share of the market, aims to lift its proportion to 8 percent in the same period.

BRIC OFFENSIVE

The Brazil offensive is the latest leg of the Renault-Nissan partnership's strategy of boosting sales and raising market share in the fast-growth BRIC countries: Brazil, Russia, India and China.

Nissan and Renault plan to launch a total of 23 models in Brazil in the next four years, aiming to boost their combined market share to 13 percent from 6.7 percent currently.

Nissan sold nearly 37,000 cars and light trucks in Brazil through August this year, compared with nearly 20,000 in the first eight months of 2010, making it the country's No. 12 car maker by sales, according to dealer association Fenabrave.

Nissan last month launched its March compact model in Brazil and next month plans to launch the Versa compact; both are cornerstones of its strategy in the BRIC countries. The launch of the two models is expected to boost Nissan's coverage of car segments in Brazil to 83 percent from just 23 percent now.

The top four producers in Brazil are Italy's Fiat SpA , Germany's Volkswagen AG, General Motors Co and Ford Motor Co.

The Brazilian economy grew a hefty 7.5 percent last year and the number of middle-class citizens has surged in the past decade, making it crucial to the growth of major carmakers as many developed economies stagnate.

Still, several auto factories in Brazil have begun to scale back production in recent weeks due to high inventories and signs of cooling demand.