Nissan to raise local content of China-made cars to 90% by 2012

BEIJING -- Nissan Motor Co. aims to increase the local content of its passenger vehicles made in China from 70 percent now to 90 percent by 2012.

The company expects to achieve this target by producing more powertrain parts locally.

Expecting to source everything from China is not realistic, says Colin Dodge, senior vice president of Nissan's general overseas market operations. For example, it is hard to source high quality materials such as high-tensile steel in China, he says.

"But (a local content rate of) 90 percent will definitely improve the competitiveness of our products in China," he says.

Dodge says Nissan will strive to raise the local content of transmissions and engines. It also plans to increase local sourcing of smaller parts, he adds.

Specifically, these parts include heater cores of air conditioning systems, steel tubes used in steering gears, airbag modules and rubber-made bushings used in front suspension systems.

Nissan currently imports automatic transmissions from Japan for its China-based operations.

In the near future, Nissan will make continuously variable transmissions (CVTs) in China, says Dodge.

Jatco Ltd., a parts supplier 75 percent owned by Nissan, is now building a plant in Guangzhou which will make steel-belt CVTs. With an initial capacity of 140,000 units, the plant is slated to start operation in 2009.

Localizing the production of the CVTs would enable Dongfeng Motor Co. Ltd., the joint venture between Nissan and Dongfeng Motor Group, to fit half of its passenger vehicles with CVTs by 2012, Kimiyasu Nakamura, president of Dongfeng Motor Co. said in a speech last week.

At present, only about 13 percent of the passenger vehicles made at Dongfeng are mounted with imported CVTs.

Nissan also plans to localize the production of one of its prime engine products, says Shoichi Matsumoto, senior general manager of Dongfeng's corporate planning division. "Details are still under discussion," he says.

Matsumoto doesn't say which engine product Nissan will first produce in China. But a source with Dongfeng says it is the VQ engine, a V-6 engine well known for its smooth operation and high power output.

The VQ engine to be produced in China will be first supplied to the Teana sedan currently manufactured at Dongfeng, says the source.