Nissan announced today that it will prepare a Renault-Samsung Motors plant in Busan, South Korea, to build the Rogue crossover. By assembling the Rogue in Korea from 2014, Nissan hopes to improve profit margins on the popular model.
Nissan will invest $160 million in the Busan plant so that it can eventually build 80,000 units of the Rogue annually. Those models will be exported all around the world, including to the U.S. market. Doing so will help improve profit margins on the Rogue crossover, especially in the U.S. thanks to free-trade arrangements between America and Korea. The Rogue is currently assembled in Japan, where a strong currency valuation reduces profit margins on cars sold in Europe or the U.S.
Emigration: Nissan Rogue Japanese Production Heading to Korea imageSo far this year, the Nissan Rogue is the second best-selling Nissan product in America, with 71,838 units sold through the end of June. The Rogue represents about half of the 140,777 imported vehicles that Nissan has sold stateside this year; the remaining 73 percent of Nissans sold here are built on U.S. soil.
Increasing profitability on popular models is always a good business strategy, but the move is especially important for Nissan's Power 88 plan. Announced just over a year ago, the five-year business plan calls for Nissan to increase its global market share to eight percent, and overall operating profit to eight percent, by the end of 2016.
Renault purchased a 70.1-percent stake of Samsung Motors in 2000, to create Renault-Samsung Motors. Nissan can take advantage of that factory because it's part of the Renault-Nissan Alliance, a long-standing partnership that was established in 1999. The Busan plant has an annual capacity of 300,000 vehicles and this year will build about 180,000 units.