To cement its status as the biggest Japanese automaker in China, Nissan Motor Co. is planning to invest $785 million or 5 billion yuan to build a plant in the northeast of the country, according to sources. Nissan hopes that with the added output, it will be able to extend its reach in China, which is the largest auto market in the world.
Nissan will get this plant built in Dalian city. This plant is included in the 30 billion yuan investment that Nissan has set aside for China by the end of 2015. It competes with General Motors Co. and other worldwide automakers in getting a share of the growth in China as other developed markets are slowing down. In addition, this demonstrates the increased competition between the big foreign automakers in China.
In the last decade, foreign automakers have cut up China into five regions and would have their domains depending on the local partnerships. This scenario has changed as automakers have been encroaching in their rivals’ supposed areas. The strongest in east and north is China Volkswagen AG due to its alliance with domestic leader SAIC Motor Corp. and FAW Group.
Meanwhile, the Japan-based automakers are left competing with each other for the southern market. But now, Volkswagen is having its first-ever plant built in the south’s Guangdong province. Its market share in the south grew from 12% two years ago to 15.8% last November.
Even GM is expanding outside of its southwest base to construct a plant in Hangzhou, located near Shanghai and GM's patch. GM has been producing cars for over 10 years in Shanghai but it recently announced plans to build a greenfield facility in the central city of Wuhan, which has long been known to be dominated by Nissan.
Analysts believe that if Nissan builds a production base in Dalian, the richest coastal city in the northeast, it would more easily get into a regional market where Volkswagen and Toyota were building their Jetta and Corolla models for many years.