Nissan Outsourcing Production to Korea to Meet Growing U.S. Demand

As it struggles to keep up with U.S. sales forecasts, Nissan Motor Company is looking to Korean automaker Samsung to increase production.

The Japanese automaker is adding additional shifts and expanding its plants in Tennessee and Mississippi, but says it’s not enough to keep pace with the demand for Altimas, Versas, Rogues and Sentras.

Under the new agreement, Nissan will invest $160 million to produce Rogues at one of Samsung Motors’ underutilized Renault factories in Busan, South Korea.  The factory will produce 80,000 Rogues annually for sale in the U.S. and other markets.

Yearly U.S. sales of the Rogue totaled nearly 100,000 units when Nissan decided to move production of the model from Japan to the U.S.  Nissan CEO Carlos Ghosn said the motive behind moving production from Japan to the U.S. was to increase profits, which were being eroded by the rising yen.

In 2011, U.S. sales of the Rogue rose to 124,543 units, and Nissan is forecasting sales to reach at least 150,000 this year. During the first six months of the year, 71,838 Rogues were sold in the U.S.

Demand has significantly outpaced Nissan’s capacity. The company’s Tennessee plant was originally expected to meet demand in the U.S. as well as supply exports to Mexico, Canada and Brazil.

Nissan plans to discontinue production of the Rogue in Japan once production begins in South Korea according to Nissan America spokesman David Reuter.

During the first six months of this year, Nissan Division’s U.S. sales reached 523,344 units, up 14 percent for the same period last year. The automaker saw a 15 percent increase in U.S. sales of Infiniti models; all of which are made in Japan except for the new JX crossover model, which is now being produced at the Smyrna, Tennessee plant.  During the first half of this year, 54,377 JXs were sold in the U.S.

In June, Nissan announced that it will increase production of Sentras at its Canon, Mississippi plant. Nissan will launch a redesigned Sentra in 2013.

In addition to increasing capacity at its U.S. facilities, Nissan is investing $2 billion to build a new factory in Aguascalientes, Mexico.

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