SAO PAULO — Nissan Motor Co. Ltd. will invest US$300 million in South America over the next five years in an effort to build sales in the region to 150,000 units by 2010. The automaker will use majority-owner Renault SA's factories and dealers, plus the two will unite back-office functions.

Nissan would have little interest in exploring the Brazilian and Argentine markets if not for its association with Renault, says Carlos Ghosn, Nissan's chief executive, a native of Brazil. “We will gain time, limit our production investments and take advantage of Renault's experience,” he tells media members gathered here for the announcement.

Nissan first plans to produce the Frontier pickup at the new Renault factory located on the outskirts of Curitiba, Parana, where Renault will build the Master delivery van.

Nissan will spend approximately US$90 million on the Frontier project, which will use 40% of the Sao Jose dos Pinhais plant's capacity. If all goes well, the facility will be capable of producing up to 50,000 Nissan and Renault vehicles annually, with Frontier beginning export to the U.S. in 2001. Nissan in 2003 will add its hot Xterra sport/utility vehicle, which uses the Frontier platform. Three other products will be produced in Argentina and Uruguay by 2005.

Additionally, the next Renault Clio to be built in Brazil will be developed on a Nissan B platform. “By 2010, we will have 10 common platforms, which will represent 90% of (worldwide) sales,” Ghosn says, adding that Nissan will benefit from production in Brazil, which has a variable exchange rate and a weak currency compared to the yen, thereby helping to neutralize costs.

Nissan will import other vehicles to Brazil and will sell vehicles made in Brazil in neighboring countries, principally Argentina. The automaker has a handful of dealers now that it plans to grow to 130, mostly from Renault's network of 75 in Argentina and 100 in Brazil. Renault predicts the Mercosur trade market to grow from 1.7 million units now to 3 million units by 2010. Nissan aims for 4% of the market and Renault aims for 11%.

“Renault in April had 6.5% of the Mercosur market, so we are getting closer to our target,” says Pierre-Alain De Smedt, Renault's executive vice-president, in an interview in Paris just before he traveled to Brazil for the recent announcement. Renault has been in Argentina for years and has 19% of the market. In Brazil, Renault's 1999 sales of 32,500 units were 2.7% of the market. Renault began a 5-year US$1.5 billion investment program in Mercosur in 1996, targeting sales of 320,000 annual units by 2005.