Nissan Motor Co. recently said “no” to producing Infiniti vehicles in Japan, but as Automotive News reports, China has received a resounding yes. Nissan has announced that it will begin building its premium Infiniti brand in China by 2014, in order to gain ground on the competition that has already established a foothold in the Chinese market.
Avoiding the tariff
Nissan’s move to produce Infiniti models in the world’s largest automotive market makes a great deal of business sense, considering that a 25 percent imported vehicle tax puts outside automakers at a disadvantage. By producing vehicles within China, Infiniti can compete with luxury market competitors like Audi AG, Daimler AG and BMW AG.
Two new Infiniti models
In a statement released by Nissan Motor Co., it was revealed that two new Infiniti models will be produced at Nissan’s upcoming Chinese production facility. The operation, which will be a joint venture with Dongfeng Motor Group Co., does not yet have specific production and sales targets assigned. However, Nissan does expect to sell at least 500,000 Infiniti vehicles globally by 2016. By sheer volume of automotive-owning population alone, China will make up the bulk of that figure.
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“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,” said Andy Palmer, head of Infiniti operations.
A great leap forward needed in China
The 500,000-vehicle total may not be a great leap forward, based upon sales from the business year that ended in March 2011. Over that 12-month span, Nissan sold about 146,000 Infiniti vehicles, mostly in the U.S. In China, however, the need for catch-up is clear: Only 16,126 Infiniti cars were sold in the calendar year, well below the 300,000 mark hit by Audi, Volkswagen AG’s premium luxury brand.
“Local production will allow customers increased access to Infiniti’s high-quality products, contributing to further growth in brand awareness and market share,” said a Nissan Motor Co. press release.
Nissan sold 4.67 million total last year
Factoring in all Nissan models, the Japanese automaker sold 4.67 million. One quarter of those were sold in China, making the nation Nissan’s largest overall market.
In addition to news of the new Infiniti models to be produced in China, Nissan revealed earlier this month that it has formed an alliance with French automaker Renault to make a new mid-sized hatchback at its plant in Sunderland in the north of England. This vehicle will also reach production in 2014.