Updated on
Summary The move to beef up production in South Korea is unique among major Japanese automakers.
The French-Japanese auto alliance of Renault and Nissan is investing $160 million in its South Korean Renault Samsung Motors to boost annual production by 80,000 vehicles, taking advantage of South Koreas free trade agreement with the U.S.The plant in the southern city of Busan is now making 180,000 vehicles a year, sold in South Korea and 60 other nations.The investment, announced Friday, will be for the next-generation Nissan Rogue crossover sport-utility vehicle, starting production in 2014, with annual capacity of 80,000 vehicles, mostly destined for North American markets. The move to beef up production in South Korea is unique among major Japanese automakers. Toyota Motor Corp. and Honda Motor Co. do not have plants in South Korea.The move is also noteworthy for taking advantage of a trade deal that Japan lacks. South Korea is ahead of Japan in such deals, and already has a free trade agreement with the U.S., and is negotiating deals with Canada and Mexico, where the Rogue is also headed.Renault Samsung Motors was the first European carmaker to set up operations in South Korea. In 1994, Nissan formed Samsung Motors Inc. with Samsung Group. In 2000, Renault SA of France purchased 70.1 percent of the bankrupt Samsung Motors, in the wake of the Asian financial crisis, and renamed it Renault Samsung. Renault now owns 80.1 percent of the manufacturer.The Busan announcement represents a unique win-win-win for Renault, Nissan and RSM, demonstrating the flexibility and power of the alliance for all partners, said Carlos Ghosn, chief executive for both Nissan Motor Co. and Renault SA.The French carmaker had risen to No. 2 by market share in South Korea in 2003 thanks to the popularity of its SM5 model. But in recent years, it has lagged behind Hyundai, Kia and GM Korea, and is closely trailed by Ssangyong Motor.The investment comes at a difficult time for Renault Samsung. A plunge in sales had even set off speculation that Renault may sell the South Korean unit. Ghosn said the announcement underlined its commitment to Renault Samsung.Its South Korean sales in the first half of this year plunged 33 percent from the same period a year earlier to 83,062 vehicles. Last month, South Koreas smallest auto player Ssangyoong Motor Co. sold more cars than Renault Samsung. All automakers are eager to boost their business in rapidly growing Asia.Renault Samsung is still a key part of Renaults effort to grow in Asia. Renault expects to sell more than half of its vehicles outside of Western Europe next year, up from 37 percent in 2010. Renault is aiming for 10 percent market share in South Korea, up from 4.4 percent in the first half of this year, and 7 percent last year.The alliance between Renault and Nissan was born in 1999, when Nissan was near bankruptcy. Ghosn, who was sent in by Renault to turn around Nissan, is revered as a management role-model in Japan. Under Ghosn, Nissan has returned to strong growth, despite setbacks last year from the earthquake and tsunami disasters in northeastern Japan. The Renault-Nissan alliance sold a record 8.03 million vehicles worldwide last year.
