Renault-Nissan invests $1.8 billion in Brazil

AP News
Posted: Oct 06, 2011 12:43 PM
Renault-Nissan invests $1.8 billion in Brazil

Carmaker Renault-Nissan announced a combined investment of $1.8 billion in Brazil, where the companies plan to introduce 23 new models in an aggressive bid to increase their share of Brazil's booming car market, the company's president and chief executive Carlos Ghosn said Thursday.

Nissan Motor Co. will invest $1.5 billion in a new plant in Rio de Janeiro state, and Renault SA will put $285 million toward the expansion of a plant in southern state of Parana to tap into the country's huge domestic market of 150 million consumers. The automakers' plan is to boost their combined annual production to 580,000 vehicles over the next five years.

Ghosn said the companies hope to increase their market share from 6.5 percent today to at least 13 percent by 2016.

"Brazil has great potential, particularly Rio de Janeiro," the Brazil-born Ghosn said, adding that the state has the infrastructure, attractive business policies and available workers to make this a solid long-term partnership.

"We are convinced that by putting the Nissan factory in Rio we are making an investment for the future," he said.

Brazil is already the fourth-largest vehicle market in the world, behind the U.S., China and Japan, and is second only to China among emerging markets for new cars.

While in Brasilia, where he met with the country's president on Tuesday, Ghosn pointed out the country's expanding car market still has a lot of room to grow. While eight out of ten people in the United States have cars, in Brazil there are only 2.5 cars per 10 people.

Ghosn said that Nissan would be ready to bring the technology behind its electric Leaf model to Brazil any time the government is ready.

After meeting with Ghosn, president Dilma Rousseff requested a government study of the feasibility of introducing electric vehicles in Brazil, Minister of Science and Technology Aloizio Mercadante said in a press conference Tuesday.

Ghosn's announcement of a "Brazil offensive" came less than a month after the Brazilian government sharply raised taxes on imported cars and trucks in a bid to protect local industry. The Sept. 16 measure increased the industrialized products tax by 30 percentage points on vehicles that don't meet rules about local content.

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Renault-Nissan's expanded presence in Brazil will allow the carmakers to minimize taxation, while also reducing transportation and logistics expenses by placing engineers and production close to supplier hubs.

Renault-Nissan's investment follows similar expansions announced by other carmakers.

Chinese carmaker announced in August that a new $600,000 million plant with an annual capacity of 100,000 units would be operational by 2014. Another Chinese brand, Chery started building a $400,000 million plant in July, aiming to 150,000 vehicles a year by 20156.

Toyota of Brazil announced in July 2010 the building of its third plant in the country, a $600 million investment which will begin production in the second half of 2012 at 70,000 units per year.