To make the Renault-Nissan alliance more competitive, $160 million will be invested in Renault's South Korean plant to produce 80,000 Nissan Rogue vehicles. By 2014, Nissan will begin to produce and export the crossover to the U.S. Nissan hopes that with this move, it will alleviate the effects of the strong yen, cope with the rise in demand, and take advantage of a South Korea-U.S. free trade deal.
Because of plunging sales experienced by Renault Samsung, the automaker’s South Korean unit, it has had to cut its output in the last few months. The company said that the Busan factory will have a 300,000 capacity and is set to produce around 180,000 vehicles for 2012.
A company statement from Renault-Nissan chief Carlos Ghosn revealed that this development will benefit Renault, Nissan and RSM. This also gives the partners the opportunity to demonstrate their flexibility and power.
Ghosn was scheduled to have a news conference in Seoul on Friday. Exporting from South Korea is appealing because of the lower valuation of the won. The Renault-Nissan alliance could benefit from South Korea's free trade deals with exports from South Korea to the U.S. and Europe.
Hyundai-Kia was able to widen its presence in Europe with the EU free-trade agreement. Last year, the Rogue was No. 2 in U.S. sales. The Altima sedan was the top-seller.
The export plan for South Korea implies that Renault isn’t so hopeful about a short-term sales recovery for the 80%-owned RSM brand, whose domestic lineup is limited and is getting older too. RSM has not so fared so well with the success of Hyundai-Kia. RSM’s domestic market share had declined by over half to less than 5% within 2 years while the combined share of Hyundai and Kia increased by 4 percentage points to 82%.