Nissan Motor expects sales in China to quadruple by 2007 as Japan’s third-biggest car maker plays catch-up with its rivals in the world’s fastest growing major car market, according to Reuters.
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Dongfeng Motor, half of which is owned by Nissan, expected to sell 74,000 cars in China this year, 90,000 in 2004 and 300,000 in 2007, Katsumi Nakamura, chief executive of the venture, told the news agency on Monday, adding that Dongfeng would also sell 226,000 trucks, vans and buses this year, with sales rising to 320,000 in 2007.
On November 19, Dow Jones cited Nissan Motor president and CEO Carlos Ghosn as saying he expected total sales from the joint venture with Dongfeng to reach 900,000 units by 2010, up from a sales target of 550,000 units in 2006.
According to Reuters, when outlining Dongfeng’s business plan for the next four years, Nakamura said sales would reach 17 billion yuan ($US2.05 billion) in 2003, with operating profit of 1.36 billion yuan.
Sales would hit 40 billion yuan next year, with operating profit seen at 3.2 billion yuan and, by 2007, Dongfeng expected to book sales of 80 billion yuan with an operating profit margin of 10% or 8.0 billion yuan ($966.5 million), the report added.
Reuters noted that Nissan, 44% owned by Renault, reported in October a global first half operating profit of 401 billion yen ($3.69 billion) and an operating margin of 11.3%.
“We aim to create valuable and profitable growth as we establish Dongfeng Motor Co as a globally competitive automotive manufacturer,” Nakamura reportedly said in a statement.
Reuters said Nissan, which announced its $2 billion joint venture in June, trails rivals such as Volkswagen, which sold more than 490,000 cars in China in the first nine months, and General Motors, which sold more than 267,000 in the period.
But analysts have told the news agency Nissan is trying to make up for lost time by offering a wide range of models.
Nissan now made the Sunny sedan in China and would launch the Teana luxury model next year, one of six new models to reach China by 2006, Nakamura reportedly said.
According to Reuters, China’s car sales have grown in the high double digits for the past couple of years, but Dongfeng chairman Miao Wei reportedly said the company was not counting on such growth continuing.
“We have seen growth of 60%, 70% a year. This cannot last too long,” Miao said, according to the news agency, adding: “In looking at the market, there are a lot of elements we cannot control, so we adopted a principle of caution when we prepared the forecasts.”
To hit targets, Dongfeng would spend 15 billion yuan on capital expenditures over four years, Miao reportedly said, while Nakamura reportedly said Dongfeng would spend 4.0 billion yuan in 2004 and 3.5 billion yuan in 2007.
According to Reuters, Nakamura said most of the investment would come from Nissan and Dongfeng’s coffers, though the companies could raise some funds from banks.
Nakamura also reportedly said Dongfeng was exploring how to set up car financing in China but felt that business was risky because of the lack of a national database of individual credit ratings.
Reuters also cited Nakamura as saying that Dongfeng, which now exports some commercial vehicles on a trial basis, also hoped to become a major truck exporter within the next decade and hoped to export more Dongfeng-branded trucks to developing nations in Africa, South America and Asia.
“Within five to 10 years, China – I hope I can say Dongfeng – will be one of the biggest exporters of trucks from China,” Nakamura told Reuters, adding: “This is a huge market opportunity for us.”
