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Mexico becoming Nissan's export hub for Americas: CEO

Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, attends a visit to the Renault automobile factory in Flins, west of Paris, Ma
Carlos Ghosn, Chairman and CEO of the Renault-Nissan Alliance, attends a visit to the Renault automobile factory in Flins, west of Paris, Ma

By Elinor Comlay

AGUASCALIENTES, Mexico (Reuters) - Japan's Nissan Motor Co Ltd <7201.T> will be producing 1 million cars in Mexico by 2016, cementing Mexico's position as export hub for Nissan in the Americas, Chief Executive Carlos Ghosn told Reuters on Tuesday as he inaugurated a $2 billion plant.

Most of the cars from the new plant in Aguascalientes in central Mexico will be sent by rail to destinations throughout the Americas.

A staff of 3,000 in the light, airy plant filled with rows of shiny yellow robots will produce one car every 38 seconds, in partnership with Nissan's other Aguascalientes plant.

"We like Mexico because it allows us to be competitive," Ghosn said in an interview at the plant. "It's not only about cost, it's also about quality and it's about responsiveness - capacity to respond to variation of the market very quickly."

"Mexico is becoming the export hub for the Americas - not only North America but also South America".

Nissan, 43.4 percent-owned by Renault SA , of which Ghosn is also CEO, will produce about 175,000 units of its Sentra model at the new plant, which has room for expansion.

Germany's Daimler AG and Nissan are expected to build small Infiniti and Mercedes-Benz luxury cars at the new plant in the future, but Ghosn said no decision has been made on plans to expand capacity.

Daimler is discussing "different strategies" for building the next-generation compacts in Mexico with partner Renault-Nissan, a top Daimler executive said late last month.

"It's capable of doing four different cars on four different platforms, so we have a lot of flexibility," said Ghosn, referring to the new plant which was built in a record 19 months.

The plant, which will assemble compact cars using engines built at Nissan's first Aguascalientes plant 5 miles down the road, is Nissan's third in Mexico.

The company is also making some "marginal investments" to its plant in Cuernavaca, south of Mexico City, to improve existing production there, Ghosn said.

Of the 1 million cars Nissan will produce in Mexico, about 300,000 will be for local sales, with the rest to be sent throughout North and South America, he said.

Nissan built around 5 million cars and trucks last year and 683,520 units in Mexico.

Japan's second-biggest carmaker has about one-quarter of all cars sales in Mexico where it is the largest producer.

BUMPS IN THE ROAD

The Brazilian-born CEO, 59, has set aggressive expansion targets for the automaker including goals for sales of electric cars, which he said are still a key focus for the company in spite of a recent revision to sales forecasts.

"We still have electric cars as a key focus, we think this technology is going to be a big part of the development of the industry in the mid- to long-term."

Nissan, the world's sixth-biggest automaker, has been ramping up spending as part of its expansion plan. This financial year, which ends in March, the company is investing in eight new plants in total, as well as expanding one existing plant.

Ghosn committed the company to boosting both global market share and its operating margin to 8 percent by end-March 2017.

But recent recalls and a sales slowdown in markets such as China and Russia have cast a shadow over that plan.

Nissan earlier this month slashed its net profit outlook for the year ending March 2014 by nearly 20 percent to 355 billion yen ($3.62 billion).

"If you have a lot of headwinds ... well, you're just going to have to be realistic and revise your ambition down, but this being said, we will continue to grow from 2014 onwards."

He said free cash flow was positive, and he did not see a cash crunch.

Ghosn, whose twin CEO contracts are up for renewal at Renault in 2014 and at Nissan the following year, said he is confident that Russia and Brazil will recover in 2014 and that sales in China are back on track after two difficult years.

Nissan is not the only carmaker spending big in Mexico.

BMW AG , Toyota Motor Corp <7203.T> and Daimler AG's Mercedes-Benz are expected to announce at least $2 billion worth of deals in the next year or two, according to suppliers and other industry sources. That is on top of nearly $6 billion in announced plants by Nissan, Honda Motor Co <7267.T>, Mazda Motor Corp <7261.T> and Volkswagen AG .

(Additional reporting by Paul Lienert in Detroit; editing by Simon Gardner and Matthew Lewis)

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