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Renault Plans to Build Cars at Nissan’s Mexico Factory

<i> From Bloomberg News</i>

French auto maker Renault said Tuesday that it will build Renault-badged cars at new partner Nissan Motor Co.'s underused factory in Aguascalientes, Mexico, to boost its Mexican sales and cut each company’s costs.

Renault, which said Saturday that it would invest $5.4 billion in Nissan, sees no need to close any of its existing factories, Chief Executive Louis Schweitzer told reporters in New York. But Nissan may close factories in Japan and elsewhere, Nissan Chief Executive Yoshikazu Hanawa said.

Renault is counting on its cost-cutting expertise and capital to help Nissan repay its debt, estimated to be as high as $37 billion, and end a slide that has seen Japan’s No. 2 auto maker lose money in five of the last six years.

“One of the clear advantages of the alliance is the ability to come back in [Mexico] and find a supplier base, manufacturing facilities and a logistics network,” Schweitzer said. Instead of creating extra capacity, he said, the companies will use existing facilities for a “win-win situation.”

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Renault has no plans to reintroduce its brand in the U.S. or to build Renault vehicles at the Nissan plant in Smyrna, Tenn., Schweitzer said.

However, Renault-built vehicles may be sold as Nissans in the U.S., while some Nissan-built vehicles may be sold as Renaults in South America and other markets, he said.

Someday, the two companies could be merged into a single corporate entity, but for now, the executives said, their goal is to develop a complementary product lineup and to help each other cut costs.


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