Nissan is determined to become a top three carmaker in the world’s biggest automotive market, and it’s spending over $8.7 billion to get there.
Nissan and its Chinese joint-venture partner, state-owned Dongfeng Group, will invest around $900 million to expand the Japanese car-maker’s production capacity in China by 40% by 2021. Production will be carried out at Nissan China’s two existing factories in addition to a new assembly plant, to be built in Wuhan, where Dongfeng is headquartered. Nissan and Dongfeng are seeking approval from Chinese regulators for the new plant, which if approved, would have the capacity to produce about 300,000 vehicles a year.
The expanded production capacity is part of a five-year plan Nissan unveiled earlier this year, called “Triple One,” to increase its market share in China with a total investment of 60 billion yuan ($8.73 billion). The company will focus on electric cars as well as the Venucia, a no-frills local brand in China. Both market segments are expected to see a surge in demand, Reuters reports. Nissan also wants to increase its sales of light commercial vans and trucks.
China’s automotive sector is currently dominated by General Motors and Volkswagen, and has been for nearly two decades. Each company sold some 4 million vehicles in China last year. Nissan falls into a distant second tier, along with Ford and two other Japanese companies, Toyota and Honda, selling 1.5 million vehicles in 2017. According to an unnamed source, Nissan’s goal is to sell up to 2.6 million vehicles a year in China by 2022.
Given the breadth of opportunity in China’s automotive sector, Nissan is not alone in its ambitions. Toyota also plans to boost its production capacity over the next few years by a planned 240,000 vehicles a year, an increase of about 20%, from its current capacity of 1.16 million a year.
