Nissan to Produce Maxima in the U.S.

Moving Japanese auto makers a step closer to being U.S. implants instead of imports, Nissan Motor Co. said Thursday that it will transfer production of its Maxima sedan to Tennessee from Japan next year.

The shift means that at least part of each top-selling Japanese passenger car line in the U.S.--except those of the luxury Lexus and Infiniti brands--will be built in North America.

Overall, 64.6% of Japanese nameplate cars and light trucks sold in the U.S. in the first eight months of this year were built in North America, according to Ward’s AutoInfoBank, which tracks automotive production.

And the percentage is expected to grow.

Toyota Motor Corp., Honda Motor Co., Nissan and Mitsubishi Motors Corp. have announced new factories or expansions of their existing North American plants. Ford Motor Co. builds several models for partner Mazda Motor Corp. at North American factories, and Toyota is talking to Mexican authorities about a new plant there. Even South Korean auto maker Hyundai Motor Co. is expected to join its Asian competitors in announcing plans for a U.S. assembly plant.

“We expect Japanese auto makers to increase their capacity in the U.S. by at least 35% through 2006,” said Jeff Schuster, Detroit-based head of North American automotive market forecasting for J.D. Power & Associates. That would give the eight major Japanese auto makers--including Subaru maker Fuji Heavy Industries Ltd., Isuzu Motors Ltd. and Suzuki Motor Corp.--the ability to build more than 3.8 million vehicles a year in this country and 700,000 in Canada and Mexico, he said.

Building in the U.S.--even when many key parts are supplied from overseas--cuts foreign auto makers’ shipping costs, speeds deliveries and can result in significant tax and currency exchange savings.

Moving Maxima production is part of Nissan’s continuing plan to shutter antiquated, expensive plants in Japan and shift vehicle production closer to the marketplace.

The model is sold only in North America. It is being redesigned for 2003 and will share a platform, or basic underpinnings, with the new Altima sedan being built at Nissan’s assembly plant in Smyrna, Tenn. The first Maximas are expected to roll off the line there in January 2003.

Nissan last year announced a $1-billion expansion of its Tennessee facilities near Nashville: an engine and transaxle plant in Dercherd and the vehicle assembly plant in Smyrna. Maxima models produced in Smyrna, the company’s first U.S. vehicle assembly plant, will use components built in Dercherd.

The company also is building a $900-million assembly plant near Jackson, Miss., for production of a new full-size pickup truck and a minivan to replace the Quest. Insiders say the factory probably will be home to a full-size sport-utility vehicle built off the pickup platform.

Nissan closed a 40-year-old manufacturing plant in Murayama, near Tokyo, as part of the move to increase North American production.

The company is in the midst of an aggressive restructuring program launched after French auto maker Renault acquired control of a near-bankrupt Nissan in 1999. Carlos Ghosn, the Renault executive tapped to take the reins at Nissan, instituted a dramatic cost-cutting program centered on plant closures, layoffs and a complete redesign of the way Nissan does business--a program that abandoned many entrenched practices unique to the Japanese business culture.

As a result, Nissan posted a $2.7-billion profit for fiscal 2000, ended March 31, the best financial results in its history and a stunning turnaround from a $6.4-billion loss the prior year.

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Made in North America

Japanese auto makers are planning major expansions of their North American production facilities in coming years. Already, more of the passenger cars and trucks they sell in the U.S. are made here and in Canada and Mexico than in Japan.

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Total U.S. sales Total made in % made in Company Jan.-Aug. North America North America Toyota 1,167,582 712,822 61.05% Honda 822,111 652,489 79.37 Nissan 467,586 304,492 65.12 Mitsubishi 207,349 112,714 54.36 Mazda 187,684 87,636 46.69 Subaru 122,212 63,246 51.75 Isuzu 62,271 49,757 79.90 Suzuki 44,501 7,742 17.40 Total 3,081,296 1,990,898 64.61%

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Source: Ward’s AutoInfoBank