Nissan to Move Sentra Production From U.S. to Mexico

From Bloomberg News

Nissan Motor Co. said it will shift production of the Sentra sedan from Tennessee to Mexico as part of an $800-million expansion of its Mexican operations, the company said.

Japan's second-largest auto maker also is considering making engines or a new vehicle at the Aguascalientes plant in Mexico, a Nissan spokesman said this week in Tokyo.

The investment, set to be completed by 2000, is part of Nissan's efforts to reorganize its operations in North America, where its sales were flat at 775,000 vehicles in the year through March 31.

The shift will allow Nissan to make better use of its Mexican plant, where it already builds Sentra sedans. By moving Sentra production to Mexico, Nissan will make room for a new sport-utility vehicle it plans to build at its plant in Smyrna, Tenn.

"It is a question of efficiency," said Masayuki Yamazaki, a Nissan spokesman.

Nissan will produce more than 330,000 vehicles at its Aguascalientes plant by 2001, compared with planned production of 172,000 this year. Almost three-quarters of the vehicles built there are Sentras.

In Smyrna, Nissan built about 12,000 Sentras last year.

The auto maker needs to "improve the economies of scale at the Aguascalientes plant, said Kaoru Kurata, an analyst at Goldman, Sachs (Japan) Ltd. The capacity utilization at the Mexican plant is currently less than 56%, a Nissan spokesman said.

Nissan lost money in Mexico in 1995 and 1994, amid a financial crisis triggered by the devaluation of the peso, the company said.

The company plans to build a sport-utility vehicle at its factory in Smyrna in 1999. It will continue to build the Altima sedan and the Truck, a pickup truck, at the Tennessee plant.

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