SAO PAULO, Brazil - Nissan Motor Co. will enter South America with two core US products, the Frontier pickup and Xterra sport-utility.
Nissan will invest $300 million over the next five years to produce five models in Brazil and Argentina in partnership with Renault SA, which already builds cars and commercial vehicles in the region.
Nissan's goal is to raise sales in the four-nation Mercosur trade bloc from zero to 150,000 a year over the next decade. The bloc consists of Brazil, Argentina, Uruguay and Paraguay.
Nissan will start in Brazil with the 2001 Frontier pickup, which goes on sale in the USA this summer. While the Brazilian assembly plant tools up for production, though, the truck will be sourced from the US plant in Smyrna, Tennessee.
The Smyrna factory already is running overtime producing trucks for the US market, and plant officials said they did not yet know how they will absorb the addition of Latin American export production.
In 2002, Frontier production will shift to Renault's new Ayrton Senna assembly plant in the city of Curitiba, south of Sao Paulo. The truck will be powered by a locally sourced 2.8-liter turbodiesel.
Nissan initially will spend $90 million to add the Frontier to the Curitiba plant, which already was being expanded to assemble the Renault Master light commercial vehicle. The factory builds 120,000 Renault Scenics and Clios a year, and a nearby facility makes 280,000 engines a year.
The Frontier most likely will be followed by the Xterra sport-utility.
Nissan President Carlos Ghosn said the partners are considering three other vehicles for production in the Mercosur market by 2005, but he declined to identify them.
They most likely would be produced in one of Renault's Argentine assembly plants.
In 2005, Renault will invest another $210 million as its South American assembly plants to add models.
In a reprise of their European strategy, the two automakers will share Mercosur dealerships and will pool back-office functions such as services, logistics and administration, Ghosn said.
With new models and new dealers, Nissan's Mercosur sales should top 150,000 vehicles a year by 2010, he said. According to current growth projections, that would amount to 4 percent of the market.
'The Mercosur region has been volatile,' Ghosn said. 'But we firmly believe that it is an attractive market for any automaker. The situation changes rapidly here but we believe in long-term growth.'
The two companies believe the region soon will return to the record sales levels of 1997, when 2.5 million vehicles where sold.
For Nissan, the Mercosur strategy marks the first significant market expansion after it unveiled its survival plan last October. Renault is using its long-established presence in Argentina as a springboard for growth throughout the region.
Despite the declining new-vehicle market over the past three years, Renault's market share in Mercosur grew to 6.3 percent in 1999 on sales of almost 110,000 vehicles. It consolidated its lead in Argentina, where it has 19.2 percent of the market, and doubled its market share to 2.7 percent in Brazil on sales of 32,500 vehicles.
Lindsay Chappell contributed to this report.