Nissan Motor Co. will increase its production capacity in China by about 30% by the end of 2021, The Yomiuri Shimbun has learned. The capacity will be raised to 1.8 million cars per year from the current 1.4 million.
Nissan’s consolidated financial results for the fiscal year ending March 2020 showed a loss of about ¥670 billion in final profit. The company hopes to find a toehold to improve its business performance in China, where demand is quickly recovering among major countries hit by the coronavirus crisis.
The company confirmed at a board meeting held in mid-October that it will proceed with the plan. Nissan will open its own production lines in plants owned by its joint venture partner, Dongfeng Motor Group Co., in Wuhan, Hubei Province, and Changzhou, Jiangsu Province.
The number of Nissan’s passenger vehicle production sites in China will increase from four to six. When completed, Nissan will have a production capacity well over the 1.49 million units for Honda Motor Co. and the 1.27 million units for Toyota Motor Corp.
Nissan will also strengthen sales of new models. By 2022, seven models, including the new Ariya electric vehicle, will be successively launched in the China market. The company will also actively market models that use Nissan’s unique hybrid technology, the e-POWER system, which combines an electric motor with a gasoline engine that charges the vehicle’s battery.
China is the largest market for new vehicles. In 2019, 25.77 million new vehicles were sold there, which represented a 10% drop from 2017 but was still much higher than the second-largest market, the United States, where 17.48 million units were sold.
New vehicle sales have been making a notable recovery. Although they fell by 80% in February compared with the same month last year, they have recovered steadily since then. And since May, new vehicle sales have been exceeding the previous year’s level by more than 10%.
Automakers other than Nissan are also counting heavily on the China market.
This summer, Toyota began building two plants in Tianjin and Guangzhou, Guangdong Province, which it says will serve as production sites for EVs and plug-in hybrid vehicles (PHVs). Honda has added production lines at two plants in Wuhan and Guangzhou this year, increasing its production capacity by 240,000 cars.
Excessive focus on the Chinese market could be a risk because China is at odds with Japan’s main ally, the United States. Delicate balancing is required for Japanese automakers since they cannot ignore China or the U.S., which are the world’s largest and second-largest markets, respectively.