Nissan Is Nearing Decision on New Assembly Plant in China, CEO Says

(Bloomberg) -- Nissan Motor Co. may decide soon on building another factory in China as the company pursues a goal of expanding sales in the country by 1 million units by 2022, according to its CEO.

“First step is adding capacity in the existing operation. We still have some room to expand,” Chief Executive Officer Hiroto Saikawa said Monday during an interview in Cordoba, Argentina. “Second step is we may add another new plant” that would have the capacity to build 300,000 to 500,000 vehicles.

China is poised to overtake the U.S. to become Nissan’s biggest market this year, and the Japanese carmaker trails only Volkswagen AG and General Motors Co. in the country. Nissan officials said in February that the second-largest Japanese automaker planned to spend 1 trillion yen ($9 billion) over five years to become the largest global electrified vehicle maker in China.

Dongfeng Motor Group, Nissan’s partner in China, said last month the two companies will invest 1 billion yuan ($146 million) to turn an existing facility in Changzhou, Jiangsu province, into a production site for Nissan with an annual capacity of 120,000 units. The plant will give Nissan a foothold in eastern China, complementing the carmaker’s facilities in the northern, southern and central parts of the country.

Saikawa was in Cordoba, 400 miles (644 kilometers) northwest of Buenos Aires, for the opening of a plant to build Nissan Frontier pickups. The investment of about $600 million will include hiring about 1,000 direct workers and creating 2,000 indirect jobs.

Read More: Nissan Mulls U.S. Expansion

Nissan may need another factory in the U.S., where it’s trying to cut its dependence on incentives and discounted deliveries to rental fleets, Saikawa said. The company is willing to discuss building one with alliance partner Mitsubishi Motors Corp., though nothing has been discussed yet, he said, and the need isn’t urgent.

“We don’t need capacity in 2019,” Saikawa said. “But for 2020 to 2022 we may be getting to the position that we may need to seek capacity for the U.S market.”

Nissan shares added 0.5 percent as of 11:30 a.m. in Tokyo. The stock had lost about 6 percent this year through Monday.

©2018 Bloomberg L.P.