Some Nissan Output Moving to Korea’s Renault Samsung

Carlos Ghosn, chairman of the Renault-Nissan Alliance, will confirm Friday that Nissan plans to allocate production of some of its vehicles to the Renault Samsung plant in Busan, Korea.

The move is designed to take advantage of excess plant capacity that has resulted from several months of declining sales.

Renault Samsung spokesmen decline to comment on the venture until it is announced by Ghosn during a Friday morning news conference in Korea and an official news release is issued.

The release of the data could affect publicly traded stock of all the companies within the alliance, they say. The uniform release of the information will comply with the requirements of all markets and securities regulators in Korea, France and Japan.

Ghosn is expected to identify the Nissan vehicles that will be produced under contract by Renault Samsung and explain how it is possible to export the vehicles to European markets on behalf of Nissan.

Korea has a free-trade agreement with the European Union that has been in force since July 2011. Analysts say it is helping the surge in Europe of sales of vehicles exported from Korea by Hyundai and Kia Motors.

The Nikkei Business Daily in Tokyo reports the Nissan-Renault Samsung venture may involve SUVs and midsize and fullsize cars, with production volumes in the tens of thousands of units.

Renault Samsung pegs its 2012 domestic-sales target at 110,000 units, equal to the poor showing of 2011, when the home market saw deliveries drop 30% to 109,221. The auto maker has closed down or curtailed production at its Busan plant three times this year because of burgeoning vehicle inventory.

On the other hand, Nissan has been operating with capacity constraints in Japan and needs the Busan production boost to meet strong global demand for its vehicles.