Nissan to Create New Passenger Car Brand With Chinese Partner Dongfeng

Nissan Motor Co. plans to introduce a new passenger-car brand in Chinese market with its local partner to help meet demand for cheaper models.

The Japanese company and Wuhan, Hubei-based Dongfeng Motor Group Co. will jointly produce and sell cars under the new brand Qi Chen from early 2012, said Hideki Kimata, senior general manager of the companies’ joint venture unit.

Nissan, which makes the Teana and Sylphy sedans with Dongfeng, will be the second Japanese carmaker to introduce a new China-only brand with a local partner as carmakers rush to expand in the world’s largest vehicle market. Honda Motor Co. unit Guangqi Honda Automobile Co. will introduce the Everus sedan on the mainland in 2011, the first car made under its new Li Nian brand.

“What Nissan is aiming for is to come up with a smaller and cheaper model without sacrificing their brand image,” said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo. Demand for lower priced cars will grow faster than for more expensive models, he said.

Qi Chen vehicles may be priced from 50,000 yuan ($7,356) to 100,000 yuan, Endo said. Nissan’s cheapest current model in China, the March compact, is priced from 69,900 yuan.

The new line has a logo similar to the five-stars on China’s national flag and will be known as Venucia when written in English, the joint venture partners said today.

Dongfeng’s Kimata declined to comment on the type of models likely to be introduced.

Shares in Yokohama, Japan-based Nissan declined 2.2 percent to 654 yen in Tokyo. Dongfeng rose 2.5 percent in Hong Kong to HK$13.72.

Electric Cars

Meanwhile, the Chinese automaker may consider using Nissan’s battery-technology in its own-brand cars, Kimata said in an interview in Beijing today.

The Chinese company plans to introduce hybrid and electric vehicles within two years and may invest 3 billion yuan in new- energy vehicle projects, President Zhu Fushou said in Hong Kong on August 30.

Dongfeng hopes hybrids and electric cars will account for 20 percent of its production within four to five years, Zhu said.

Separately, Nissan’s Chinese joint venture unit will begin pilot tests of its rechargeable Leaf hatchback in Wuhan next year, Kimata said.

Nissan’s Chief Executive Officer Carlos Ghosn plans to boost Nissan’s production capacity in China to 900,000 vehicles a year by 2012.

The Japanese automaker, which sold 434,448 vehicles in China in the first eight months of this year, plans to begin production at a new plant in China this month to keep pace with rising demand, Mitsuru Yonekawa, a spokesman at the Yokohama, Japan-based company, said last month.

Nissan will start making multipurpose cars at a plant in Zhengzhou, eastern China, and will produce 120,000 units a year, he added. The new plant may ease capacity constraints at another factory in the Huadu district of Guangzhou, which builds the Dualis and X-Trail sport-utility vehicles, Yonekawa said.

--Liza Lin, Vincent Ni. With assistance from Makiko Kitamura in Tokyo. Editors: Ian Rowley, Kae Inoue

To contact Bloomberg News staff on this story: Vincent Ni in Beijing at +86-10-6649-7508 or vni1@bloomberg.net Liza Lin in Singapore at +86-21-6104-7010 or llin15@bloomberg.net

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