RIO DE JANEIRO Nissan (7201.T) will invest about $1.5 billion in a new Brazilian plant as it seeks to expand its market coverage in the Latin American giant with the launch of new compact models, the Renault-Nissan chairman and chief executive Carlos Ghosn said on Monday.
The French-Japanese partnership plans to introduce "many" models to the Brazilian market in the coming years as it seeks to double its share of auto sales in Latin America's largest economy to 13 percent by 2016, Ghosn told Reuters in an interview in Rio de Janeiro.
Renault-Nissan plans to build the new Nissan factory and expand an existing Renault plant in Brazil as part of efforts to boost its presence in the world's fourth-largest car market, where it is currently fifth in sales.
The Brazil offensive is the latest leg of the partnership's strategy of boosting its sales and raising market share in the BRIC countries of Brazil, Russia, India and China. For the 57-year-old Ghosn, who grew up in Rio de Janeiro and still considers it his home, the investments carry an emotional element and well as making business sense.
"It is the only BRIC country where we did not announce an offensive strategy. We have already announced it for China, for Russia, for India," he said.
"Now is the right time to announce it for Brazil. For me, on top of the objective reasons, it's a very emotional moment because I like Brazil, I was born in this country."
The new Nissan plant in Resende, about 56 miles from Rio, will produce Nissan-brand vehicles and the group will expand its main factory in Sao Jose dos Pinhais, where it has made Renault-brand (RENA.PA) vehicles since 1998.
Ghosn confirmed a Reuters report that the group would invest about $1.5 billion in the new Nissan plant.
A source told Reuters it could produce about 220,000 cars per year.
Ghosn is due to announce more details of the investments at separate events on Wednesday and Thursday.
BRAZIL ELECTRIC CARS SEEN TAKING TIME
His aim is to raise Nissan's share of the fast-growing Brazil market to 5 percent by 2016 from around 1.5 percent now. Renault's share is seen gaining to 8 percent from just over 5 percent now.
Nissan and other Asian automakers still lag the big four producers in Latin America's largest economy -- Italy's Fiat SpA FIA.MI, Germany's Volkswagen AG (VOWG.DE) and U.S.-based General Motors Co (GM.N) and Ford Motor Co (F.N). But they are increasing their presence, including planned factories for Chinese brands Chery and JAC Motors.
Nissan sold nearly 37,000 cars and light trucks in Brazil through August this year, compared with nearly 20,000 in the first eight months of 2010, making it the country's No. 12 carmaker by sales, according to dealer association Fenabrave.
Ghosn spoke before heading to the city of Foz do Iguacu to officially launch Renault's Duster 4X4 vehicle for the Brazilian market, which he said was going to be a "big contributor" to sales.
"Renault's potential is way above 5 percent. We're going to pursue this potential, we're going to bring cars, we're going to be contributing to the development of the Brazilian market," he said.
Nissan last month launched its March compact model in Brazil and next month plans to launch the Versa compact, both of which are cornerstones of its strategy in the BRIC countries. The launch of those two models is expected to boost Nissan's coverage of car segments in Brazil to 83 percent from just 23 percent now.
"We are coming with two products that are already tested and already successful in other markets," Ghosn said.
"These are not the only cars we are going to be launching. There are many other cars which are going to be launched."
Despite his ambitious target of selling 500,000 electric cars globally by 2015, Ghosn said there were no immediate plans for Nissan to produce those models in Brazil. He said he was pessimistic about the prospects for electric cars here in the short term, partly because of Brazilian drivers' high use of biofuels, but he saw stronger potential over the medium to long-term.
(Editing by Carol Bishopric)