Reuters (Tokyo) - Nissan Motor Co will outsource production of some vehicles to Renault SA's struggling South Korean unit to meet strong demand and ease the impact of a strong yen, the Nikkei business daily said on Thursday.
Japan's Nissan, which is already in an alliance with France's Renault, could transfer building of tens of thousands of sport utility vehicles and other midsize and large cars a year to Renault Samsung Motors, the paper said without citing sources.
Nissan, which has struggled with insufficient production capacity, wants to take advantage of South Korea's free trade agreements with the European Union and elsewhere and could use the unit, 80 percent owned by Renault, as an export base, the Nikkei said.
Spokesmen from both Nissan and Renault Samsung declined to comment.
Carlos Ghosn, who heads Nissan, Renault and the Renault-Nissan alliance, will visit South Korea on Friday and hold a news conference, a spokesman for Renault's South Korean unit said.
Renault's South Korean factory builds some Nissan-badged cars such as Sunny and Almera bound for markets such as Russia and the Middle East, and Renault-branded vehicles for China, Europe and other markets.
With an annual capacity of 300,000 vehicles, the plant, located in the southeastern city of Busan, has cut production in recent months in the face of slumping sales in South Korea and overseas, partly as a result of lack of new models.
Renault Samsung, which exported 63 percent of its vehicles in the first half, saw its total sales slump 33 percent from a year ago. Renault Samsung, which used to be South Korea's No.3 carmaker after Hyundai Motor and Kia, has been losing ground in recent years, with its domestic market share slumping to 4.7 percent in the first three months of this year, from 10.1 percent in 2010.
In 2010, Nissan bid on South Korean SUV maker Ssangyong Motor to provide capacity for its South Korean operations, but later dropped out of the race.
Renault Samsung was created in 2000 when French car maker Renault SA took a majority stake in the former Samsung Group car making unit.
