Renault-Nissan to Build Rogue in Korea for Export to U.S.

The Renault-Nissan Alliance is investing 183 billion won ($160 million) to ready its Renault Samsung subsidiary’s Busan plant to assemble the next-generation Nissan Rogue cross/utility vehicle beginning in 2014, Chairman and CEO Carlos Ghosn confirms today in South Korea.

Busan will build 80,000 units of the CUV annually, all of which will be exported to the U.S., a spokesman says. The move takes advantage of the factory’s extra capacity resulting from Renault Samsung’s declining sales.

This year, the plant plans to produce 180,000 vehicles for sale in Korea and 60 other countries.

“Adding production in Korea shows a commitment across the Alliance to helping Renault Samsung Motors achieve its targets for cost competitiveness and growth,” Ghosn says in a prepared statement.

“The Busan announcement represents a unique ‘win-win-win’ for Renault, Nissan and RSM, demonstrating the flexibility and power of the Alliance for all partners, and I am counting on every RSM employee to contribute to the successful completion of this project.”

Whether it means a winning situation for Nissan North America is not clear. The question is whether the decision to export the Rogue from Korea to the U.S. cancels the recently confirmed plan to produce it in the U.S. Nissan first announced the plan to transfer production from Japan to Nissan’s Smyrna, TN, facility in January 2011.

As recently as July 7, senior Nissan North America executives in Tennessee still were discussing the plan to add to add 1,200 employees at Smyrna plant by year-end and a third shift to its passenger-vehicle line to accommodate both the Rogue and Leaf electric vehicle.

The Rogue has proved a best-seller in the U.S., and producing it in a lower-cost market than Japan would increase both price competitiveness and profit margins. Rogue sales in the year’s first half climbed 24% to 71,838 units, compared with year-ago, according to Nissan North America. June sales alone jumped 46.8% to 10,999.

Some of the $160 million infusion for the RSM plant will go toward modifying the existing flexible robotic assembly line to accommodate the Rogue.

The factory currently welds together the body parts of four different vehicles – the SM3 compact, SM5 midsize and SM7 midsize luxury sedans and the QM5 compact CUV – in a continuous operation, then delivers the assembled bodies for finishing and coating.

Additionally the modifications are required for the press and die self-contained press shop. The investment also includes other equipment updates within the plant, which has been operational for the past 15 years.

A spokesman says details of the required modifications will be announced as the Busan assembly plan is developed over the next 6-month period.

Ghosn was in Busan Friday on an inspection tour of the assembly plant and its incorporated engine plants, then traveled to the RSM Technical Center in Kiheung, close to Seoul, to present the new production plan to workers.

“All of our employees are very much pleased about this, as these days our sales results do not show very well,” the spokesman says.

RSM’s first-half sales reportedly tumbled 32.8% to 83,062 units, with domestic deliveries plunging 41.7% and exports down 26.1%.

June sales plummeted 48.3% to 12,512 units. Domestic deliveries slid 58% to 4,008 units and exports were off 43% to 8,504. Locally, the auto maker slipped from a double-digit market share to 8.2% in the first six months, and to less than 5% in June.

Ghosn says RSM’s revival plan calls for the production of 180,000 vehicles at Busan this year and a 10% domestic share of the market.