New Nissan plant raises sales hope

By Alan Ohnsman
Bloomberg News Service

CANTON, Miss. — Nissan Motor Co., Japan's third-biggest automaker, is betting its new U.S. plant will be the key to meeting the automaker's target of raising annual sales by 1 million over the three years to 2005.

The Tokyo-based automaker yesterday opened its first new North American auto plant in 20 years in Canton, Mississippi, to help it gain more U.S. market share this year, extending the company's four-year rebound from near-bankruptcy to record profit.

The $1.4 billion Canton plant raises Nissan's annual capacity in North America, the world's biggest market, by half to 1.23 million vehicles, narrowing the gap with rivals Toyota Motor Corp. and Honda Motor Co. Nissan, which forecast a fourth year of record sales and operating profit this year, needs the project to succeed, investors said.

"Nissan needs to make sure that this project goes well to meet its sales target," said Norihito Kanai, who helps manage about $2.5 billion in funds for Meiji Dresdner Asset Management Co. "If the project succeeds, it would contribute to a big portion of Nissan's sales as well as profit."

Nissan gets about 75 percent of its profit from North America and its new Titan pickup truck, to be made at Canton, will generate about $10,000 of profit a unit. That's four times the profit Nissan gets from the March compact car, one of the company's best-selling models in Japan, according to Koji Endo, an analyst at Credit Suisse First Boston Japan Inc.

Nissan shares rose as much as 3.7 percent to $7.75 and were traded at $7.67 at the 11 a.m. close of morning trading in Tokyo. The company's American depositary receipts, each representing two ordinary Nissan shares, fell 15 cents to $15.15 in Nasdaq Stock Market trading yesterday. They have fallen 1.5 percent this year.

Nissan, which makes Z sports cars and the Infiniti brand, didn't open any new North American plants between 1980 and 2002 as its U.S. market share dropped to 4.4 percent from 5.6 percent.

In the same period, Toyota built three plants and raised its U.S. share to 10.4 percent from 6.4 percent. Honda also added three plants and now controls 7.4 percent of the market, up from 3.3 percent.

The 3.5-million-square-foot Canton plant, which began building Quest minivans, will have capacity to make 400,000 cars and trucks annually when it reaches full production next year, giving Nissan overall capacity of 1.23 million units in the market.

Toyota, the world's biggest automaker by market value, will have capacity of 1.48 million in North America by the end of 2003 and is preparing to open a plant in Mexico next year and another in Texas in 2006.