REFILE-UPDATE 1-Nissan to make premium Infiniti cars in China from 2014

Fri Apr 20, 2012 4:42am EDT

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* Nissan China JV with Dongfeng Motor to produce 2 Infiniti models

* Local China production "a necessity" for sales expansion - exec

* Infiniti decision puts pressure on Toyota, Honda

By Chang-Ran Kim

TOKYO, April 20 (Reuters) - Nissan Motor Co Ltd said on Friday that it will start building vehicles under its premium Infiniti brand in China from 2014 as Japan's No.2 automaker aims to challenge the dominance of German rivals in the world's largest car market.

The move to produce Infiniti models in China, where tariffs of 25 percent put imported vehicles at a disadvantage, should put Nissan on a better footing to compete with market leaders Audi AG, Mercedes Benz maker Daimler AG and BMW AG, which all produce locally.

Nissan said in a statement that it would build two yet-to-be-identified Infiniti models at factories operated by its joint venture with Dongfeng Motor Group Co Ltd. It did not provide sales or production targets.

Under a mid-term growth plan, Nissan is targeting sales of 500,000 Infiniti vehicles globally by 2016, and has said China would account for a chunk of that growth.

"For the brand to reach its aggressive sales target ... local production in the world's largest automobile market is not an option but a necessity to our success," Andy Palmer, head of Infiniti operations, said in a statement.

Nissan sold about 146,000 Infiniti vehicles globally, mostly in the United States, in the business year ended March 2011. In China, Infiniti sold just 16,126 cars last calendar year, a fraction of the more than 300,000 sold by Audi, Volkswagen AG's premium brand.

Nissan's decision cranks up pressure on Japanese rivals Toyota Motor Corp and Honda Motor Co Ltd, which are also looking to catapult sales of their premium Lexus and Acura brands globally, but have given no indication they plan to produce those cars in China. (Editing by Chris Lewis)