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  HOME | Brazil (Click here for more)

Renault-Nissan to Build New Car Plant in Brazil

BRASILIA – The chairman and chief executive of Renault-Nissan, a French-Japanese auto-making alliance, said Saturday after meeting here with Brazilian President Dilma Rousseff that Nissan will build a new plant and Renault will expand an existing factory in the South American country.

Carlos Ghosn said the respective investment outlays and details of the projects will be announced on Wednesday in the southern city of Curitiba, where Renault’s plant is located, and on Thursday in Resende, Rio de Janeiro state, where the new Nissan factory is to be built.

Speaking at a press conference in the Planalto presidential palace in Brasilia, he also said that Renault-Nissan plans to build a technology and product-development center in Brazil and that he spoke with Rousseff about the potential of electric vehicles.

“We think that Brazil, the world’s fourth-largest car market, is strategic for our group not just because of the quantities sold but also because of the technological development,” the Brazilian-born, French executive said.

Ghosn acknowledged that the alliance’s 6.5 percent market share in Brazil is far below its 10.5 percent share worldwide.

“We think we’ve got greater potential in Brazil. The goal of the investments is to double that market share by 2016 to 13 percent,” the executive said, adding that the idea is for Renault’s market share to climb from its current 5.5 percent level to 8 percent and for Nissan’s to rise from 1 percent to 5 percent.

Although Ghosn did not give specifics on the investment outlay, sources with the regional government of Parana cited by the media said the cost of expanding the Renault plant in Curitiba, the state capital, could amount to close to 1.5 billion reais (some $833 million).

That expansion, according to the same sources, will allow Renault to expand its output in Brazil from 220,000 automobiles per year at present to some 300,000 units annually.

Press reports said that Mexico and Argentina also were trying to woo Renault-Nissan’s investment dollars but that the alliance decided on Brazil due to the size of the market and fiscal incentives offered by the regional governments of Parana and Rio de Janeiro.

Last month’s announcement by the Brazilian government to raise by 30 percentage points a tax on cars that are either imported from outside the regional Mercosur customs union or do not have a minimum of 65 percent domestically manufactured parts also weighed on Renault-Nissan’s decision.

“It’s a decision that really encourages manufacturers to produce locally. But we think Brazil’s local-content rate is reasonable given that in China and India it’s around 90 percent,” Ghosn said.

Nissan-brand automobiles currently sold in Brazil are imported from Mexico, with just a small portion of the total made at the Renault plant in Curitiba.

With the new plant, Nissan will make nearly 200,000 cars a year in Brazil, with a high ratio of parts manufactured by domestic suppliers in Resende.

“Today we also talked with the Brazilian president about technological development, flex vehicles (which can run on any combination of gasoline or ethanol), electric and hybrid cars,” Ghosn said, without providing details on the technology center the alliance plans to build in Brazil.

Science and Technology Minister Aloizio Mercadante, who participated in the meeting with Ghosn, said Rousseff has instructed his portfolio to conduct a feasibility study on the ability of Brazil’s current electricity system to supply power for a fleet of electric vehicles.

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