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Renault-Nissan to invest $160 million in local unit

July 20, 2012 - 20:24 By Korea Herald
The Renault-Nissan Alliance said Friday it will pour $160 million (170 billion won) into the ailing Korean unit Renault Samsung Motors for the production of Nissan models at the carmaker’s factory in Busan from 2014.

The new investment plan came as Nissan Motor CEO Carlos Ghosn, who is also chairman and CEO of the strategic partnership between French and Japanese auto giants Renault and Nissan, arrived in Korea four years after his previous visit.

Under the plan, the Renault Samsung factory in the nation’s southern port city will produce an annual 80,000 units of Nissan’s crossover Rogue beginning in 2014. It will mark the first time that a Korean carmaker produces Japanese cars here. 
Carlos Ghosn, chairman and CEO of the Renault-Nissan Alliance, looks around Renault Samsung Motors’ factory in Busan on Friday. (Renault Samsung Motors)

The Renault-Nissan Alliance, which is based on a unique cross-shareholding agreement, also pledged to elevate its current market share to 10 percent in Korea with new introductions of compact crossover vehicles and all-electric cars into the company’s 2013 lineup.

The Busan production of the next-generation Rogue is expected to give new momentum to Renault Samsung, which has been struggling from plunging sales. In the first six months to June, the carmaker sold 83,062 units, down 33 percent from a year earlier.

“The plan aims to achieve efficiency and cost competitiveness in Busan, while expanding RSM’s vehicle lineup, which today consists of four models,” Ghosn said in a news conference in Seoul.

Calling the Busan announcement a “win-win-win” for Renault, Nissan and RSM, he said: “Adding production in Korea shows a commitment across the alliance to helping Renault Samsung achieve its targets for cost competitiveness and growth.

Company officials also predicted that price competitiveness through the Busan production would drive up car sales in Korea. This year the plant aims to build about 180,000 vehicles for sale in Korea and 60 other countries.

Formed in 1999, the Renault-Nissan Alliance, the world’s third largest carmaker in terms of sales, posted a record sale of 8.03 million vehicles in 2011. Its brands include Renault, Nissan, Infiniti, Dacia and Renault Samsung Motors.

RSM, among them, is a key asset to the French automotive group Renault as it seeks to increase its industrial footprint and sales volume outside western Europe, particularly in fast-growing Asia-Pacific markets.

Ghosn, 58, joined near-bankrupt Nissan in 1999 and became CEO in 2001. Over the past 12 years, he has turned Nissan, Japan’s second-largest carmaker, into a leading auto company in profitability.

By Lee Ji-yoon (jylee@heraldcorp.com)