BANGKOK – Nissan’s recently announced TB11 billion ($358 million) investment to build a second factory in Thailand, and ramp up production an additional 150,000 units, is significant on several levels.

It’s the biggest signal yet that Japanese auto makers remain fully committed to Thailand in the wake of the country’s devastating floods last year.

The fresh investment also confirms Nissan’s aim to make Thailand its Association of Southeast Asian Nations’ production hub, as the region counts down to the loosening of trade barriers at the end of 2015. In fact, Nissan’s output in the region is slated to double by 2016.

Importantly, the new plant also brings the Navara 1-ton pickup in from the cold, establishing the truck as one of the future key planks in Nissan’s effort to push its Thai market share to 15% over the next three years.

“This investment is a platform for further growth in Thailand and the region,” says Nissan Executive Vice President Hiroto Saikawa. “We are trying to cover most of the significant growth markets.” With ASEAN set to provide future prosperity, Nissan’s strategy forms a critical part of this.

Saikawa is quick to dismiss any suggestion Nissan’s decision to invest additional funds in Thailand is influenced by the current political situation in China, where Japanese products including cars are being boycotted by consumers due to a territorial tiff between the two countries.

Nor is the auto maker concerned about market demand. “The Chinese economy is slowing down, but still growing,” he says. “We will stay in China (and) be strong in China. (We have) no intention to shift (production) from China.”

Rather, he says Nissan is a global company and needs to pay attention to growing markets such as India and ASEAN. Thailand is a key part of the Japanese OEM’s growth drive. “Nissan is aggressively increasing capacity, so that’s a good reason to invest in Thailand as our capacities are full.”

Nissan has a renewed sense of confidence here as it turns out vehicles that are connecting with consumers. The new chapter started two years ago with the March, the first of the new breed of eco-cars the Thai government has encouraged. The follow-up Almera sedan also has been a hit with customers, with more than 115,000 combined sales of the two models to date.

But assurances are important right now. The devastating floods of a year ago and the threat they could return in the future has cast a shadow over the Japanese presence here. Saikawa insists he is satisfied the government has the flood situation under control. “I’m pretty confident.”

Although Nissan emerged relatively unscathed, compared with damage sustained by Toyota and Honda, he says the auto maker requires risk management, such as having two available locations for production in the country. “Lessons have been digested by all the major players.”

The auto maker currently exports vehicles to 97 countries from its production base here. "We will continue to expand our production footprint; Thailand will continue to play a key role in (our) global production."

Takayuki Kimura, president of Nissan Thailand, says Nissan needs flexibility in the 10-member ASEAN group because individual market demand varies. For example, multipurpose vehicles make up two-thirds of sales in Indonesia, while pickup trucks account for half of Thailand’s deliveries, where sedan sales also are strong.

Kimura believes Nissan Thailand has made impressive strides in recent years and now can be labeled as a mature operation. He refers, in particular, to the quality levels achieved, which he says are on par with Japan.

Significantly, the B-segment March became Nissan Thailand’s first car to be exported back to Japan. “In Thailand, our production quality is high and our supply base is solid,” Kimura says. The new plant investment “confirms our commitment to Thailand for jobs, innovation and efficiency.”

He also reckons Nissan is investing into a firm climate for the auto industry, noting, “new suppliers are coming to Thailand and existing suppliers are enhancing” their operations. This means the auto maker is riding on the “advantages and benefits of a strong industrial base for automotive in this country.”

Against this backdrop, Kimura says Nissan Thailand is seeing positive growth. "We are well on track to achieve a 10% market share in this fiscal year, and we aim to achieve a 15% market share in 2016 in ASEAN."

Saikawa says this means tripling sales volume and doubling share from 2010 levels. "It’s a huge challenge, but we are quite confident.”

Nissan’s midterm business plan for ASEAN calls for sales to grow to 500,000 units and 15% share by 2016. The auto maker started with 120,000 units and a 6% share in 2010, rising to 176,000 and a 6.9% share in 2011.

More than 10 new Nissan models will contribute to the 2016 target, Saikawa says, while production will go from 350,000 units in 2010 and 400,000 in 2011 to 700,000 in 2016, thanks to new plants in Thailand and Indonesia.

Nissan’s new Thai factory, to be built alongside the existing 220,000-unit-annual-capacity plant, will assemble the Navara only, signaling its importance as a core product. “Our pickup truck has played a central role in Nissan’s (Thai) history,” says Saikawa.

However, the truck has languished in recent years as Nissan focused on its successful eco-car. Rivals such as Ford, Chevrolet, Mazda and Isuzu have renewed their pickup contenders, while the Navara’s production was outsourced to Mitsubishi in order to clear space for other models.

Mitsubishi builds the Navara alongside its Triton pickup at its plant in the Laem Chabang Industrial Estate in Chonburi.

Prapat Choeychom, senior vice president of Nissan Thailand, does not reveal what updates the Navara might receive, but he points out the truck was introduced in 2007 and its expected lifecycle is about a decade.

The production target for the new factory’s first year in 2014 will be 75,000 units, climbing to the full 150,000-unit capacity by 2016.

Saikawa cautions that while initial capacity at the new factory will be focused on the Navara, this will depend on how successfully Nissan galvanizes interest in the truck. For the foreseeable future, we will use this capacity for pick up (only).”

Bringing the Navara back in-house is not as onerous as it might seem. Saikawa says Nissan has had a “good collaboration” with Mitsubishi, but “both Nissan and Mitsubishi are growing. However, “further collaboration is still open.”

Nissan also is aiming to produce cars that match consumers’ demands, a point Kimura sees as core to the new investment as well. “The new production capacity is required to deliver the right product at the right time to the customer.”

Kimura says parent Nissan’s midterm Power Up 88 plan for Thailand is being revised, thanks to the market here, which he describes as “booming.” Nissan Thailand’s full-year sales goal now is 132,000 units, up from 120,000 previously.

That builds on 65,000 deliveries in 2010, followed by 76,500 last year. This growth will be underpinned by continuing to lead the eco-car segment, expanding the sedan lineup, adding more dealers and reviving the pickup segment, Kimura says.

Nissan’s March and Almera account for more than half of the segment’s sales, with 75,000 March units delivered since March 2010, he says.

Kimura points to Nissan’s newest arrival as adding to a growing string of models that are connecting with consumers. “The Sylphy launched into the C-segment, where the competition is fierce,” he says. “The car has more than 4,500 orders already, although it is not part of the Thai government’s First Time Buyer incentive scheme.”

Nissan Thailand has 173 dealerships today, up from 160 in 2010, and Kimura says the number will grow to 210 by the end of 2013 and 250 by 2016. The network expansion will be made necessary because “improved quality will improve customer satisfaction.”

Kimura is ambivalent about the possible extension of the government’s volume-driving incentive program. He expects 1.3 million cars will be sold in Thailand this year, with only 300,000 units attributed to the First Time Buyer scheme. “If (the program) is extended, it will extend demand. If it stops, there will be some drop, but now is very good for us.”