Nissan to build $2 billion plant in Mexico

Nissan Motor Co. will build a $2 billion auto assembly plant in Mexico — its third in that country — as it works to outgun rival Honda Motor Co.

The plant, in Aguascalientes, Mexico, will have initial capacity to build 175,000 light vehicles annually for the United States, Mexico and Latin America, with plans to expand. Production is scheduled to begin by the end of next year.

Nissan did not specify what model will be produced at the plant initially, but one company executive described it as "an existing B-segment nameplate that is currently in short supply." That description suggests the subcompact Versa, which already is built at an existing Nissan plant in Aguascalientes and sold in the United States and other markets.

Models will be added as capacity is increased at the new plant. Nissan's other Mexican plant is in Cuernavaca. A redesigned Versa sedan was launched last fall and has been exceeding sales expectations.

Ambitious goals

But Nissan — which enjoyed a 15 percent increase in U.S. sales and grabbed 8.2 percent of the U.S. market in 2011 — has bigger ambitions.

It hopes to capture 10 percent of the U.S. market; outsell the Honda brand for the first time; move more vehicle production out of Japan to North America; and become the dominant Japanese automaker in Latin America.

To do all that, it needs more factory space.

Nissan produced 1.18 million light vehicles in North America last year, up 16 percent from 2010 and enough to edge the output of rivals Honda and Toyota.

Today's announcement represents an aggressive step forward by Nissan. Big auto assembly plants routinely cost about $1 billion — Nissan is planning to spend twice that much in Aguascalientes, and to spend it fast.

According to the timetable, Nissan will move from groundbreaking to commercial production by the end of 2013 — or less than 23 months.

Nissan is beginning to strain under its existing U.S. plants. Just four years ago its two factories in Smyrna, Tenn., and Canton, Miss., were underutilized and Nissan was reducing U.S. head count.

That situation is now reversed: The Mississippi plant is now building the Altima model on three shifts, and the company has been hiring hundreds of workers in Smyrna to keep pace with rising output. The Smyrna site is also adding three new models; the all-electric Leaf, the Rogue crossover and the new Infiniti JX crossover.

Nissan is also maxed out on the capacity of its two large assembly plants in Mexico, says Bill Krueger, vice chairman of Nissan Americas, who was scheduled to announce plans for the new plant in Mexico today.

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