AUTOSHOW-UPDATE 3-Nissan to build Infiniti outside Japan

Wed Sep 14, 2011 1:00pm EDT

* Decision comes due to strong yen - Nissan CEO

* Infiniti compact to be built in Europe -sources

* Mercedes to offer architecture, diesel engines

* "Organic" as alternative to "mechanic" German brands (Adds Infiniti's European sales chief)

By Christiaan Hetzner and Helen Massy-Beresford

FRANKFURT, Sept 14 (Reuters) - Japanese automaker Nissan Motor Co will build its next Infiniti models including a new premium compact car outside its home market to escape the burden of a strong yen, Chief Executive Carlos Ghosn said on Wednesday.

The strength of the yen, which at 77 to the dollar is close to a record high, makes Infiniti cars built in Japan less price competitive with rival luxury brands, said Ghosn, who also is CEO of Renault .

"The next generation Infiniti cars will be built outside Japan," Ghosn said during a joint press briefing with partner Daimler (DAIGn.DE) to update the market on an alliance forged in April 2010.

Japanese auto executives have repeatedly warned that the yen had strengthened beyond what domestic exporters could cope with, with Honda stating last month it was considering further production bases overseas.

Nissan wants to roll out its Infiniti brand worldwide to grab a greater share of the premium market, which offers greater growth and higher profits than found in the volume segment that is home to Nissan.

Similarly ambitious plans have come to a screeching halt for General Motors' Cadillac and Toyota's Lexus after their models flopped in Europe, mainly due to strong competition from German brands like BMW and Audi (VOWG_p.DE) as well as a lack of competitive diesels.

Infiniti's European sales chief Guillaume Pelletreau told Reuters in an interview that the Japanese luxury brand probably couldn't launch an assault on the European market without the help of alliance partner Daimler (DAIGn.DE), which will supply a vehicle architecture and diesel engines to the brand.

To entice the discriminating German and British customers needed to sell 100,000 cars in western Europe by 2016, Infiniti wants to offer a completely different experience from the mainstream luxury brands like Mercedes-Benz and BMW.

"Our cars are all about curves and sensuality, creating something 'organic' as an answer to the 'mechanic' approach of the legacy (German) brands," Pelletreau said.

EUROPEAN PRODUCTION

Infiniti believes sponsoring Formula One Champions Red Bull Racing and its pilot Sebastian Vettel will help generate broad awareness for the brand in Europe where it started only three years ago.

"I don't think there will be any other sponsorships, since the best way to create familiarity is not to get diluted with too many different messages," the European sales chief added.

"A lot of brands are getting lost since they have no real story, they have no real consistency," he continued, saying that as a result all dealerships would sell Infinitis only and not have a Nissan showroom attached.

Sources told Reuters earlier that Nissan would announce plans to build a premium compact car in Europe off a Mercedes-Benz architecture in the next couple of years, making it the first Asian luxury brand to manufacture there.

Nissan declined to say where it would be built, but indicated a Chinese site would be needed in addition to a European one to meet demand by customers in those two regions who are looking for an alternative to the BMW 1 Series or Audi A3.

"Why are you assuming it's one plant? The volume of the C-segment in the luxury space is the biggest TIV (total industry volume)," Executive Vice President Andy Palmer told Reuters.

So far, Renault and Daimler are cooperating to explore electric versions of the Mercedes Smart car and the Renault Twingo, as well as a small delivery van based on Renault architecture.

The automotive industry is littered with failed partnerships, including an alliance between Japan's Suzuki and German carmaker Volkswagen, which hit the skids this week.

Suzuki is seeking a divorce from its German partner, ending a two-year partnership that failed to deliver meaningful projects. (Reporting by Paul Ingrassia, Christiaan Hetzner and Helen Massy Beresford; Writing by Maria Sheahan and Ludwig Burger; Editing by Will Waterman and Mike Nesbit)

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