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INTERVIEW-Nissan sees Sentra demand delivering U.S. market gains

Source: Reuters - Mon, 13 Jan 2014 17:23 GMT
Author: Reuters
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* Nissan exec sees U.S. market growing by 1 pct at most in 2014

* Says Nissan will outpace market on pent-up demand for Sentra

* To need more capacity in Mexico if Nissan hits sales goals (Adds comments by Nissan executive, company and industry background)

By Nathan Layne

DETROIT, Jan 13 (Reuters) - Nissan Motor Co Ltd expects to outpace overall growth in the U.S. automobile market, which it sees rising by 1 percent at most in 2014, as the Japanese automaker meets pent-up demand for the Sentra, Nissan's chief planning officer said on Monday.

Andy Palmer expressed confidence that increased supply of the Sentra from a new factory in Mexico would help boost its 8 percent share in the U.S. market, although he acknowledged that meeting a goal of 10 percent market share in three years was no sure thing.

"We will outperform the market, that's for sure," Palmer told Reuters in an interview at the Detroit auto show, predicting that sales in the overall U.S. market would be flat to up as much as 1 percent this year. Last year, the U.S. auto market grew by more than 7 percent.

"We simply can't build enough Sentras," he said.

Nissan and its Infiniti luxury brand sold a combined 1.25 million vehicles in the United States last year, marking a rise of 9.4 percent and a record high for the Japanese company, in which French car maker Renault owns a 43.4 percent stake.

CEO Carlos Ghosn has outlined ambitious goals for Palmer and other top executives under a business plan that runs through the fiscal year ending in March 2017. One of the key targets in that plan is achieving a 10 percent market share in the United States, where Ghosn believes Nissan is punching below its weight.

Palmer said "the trajectory is good" thanks to efforts to bring a more consistent marketing message to customers, the potential to expand its dealer network and a better lineup of cars. But he described the market share goal as "more of a target than a commitment" and acknowledged challenges in catching up with other brands.

Palmer said that while Nissan has been lowering sales incentives offered to customers it is still at a disadvantage in U.S. dealerships compared with such rivals as Toyota Motor Corp .

"Fundamentally our products are as good as the other guys out there," he said. "We would expect to be in a good direction with Nissan and Infiniti by the end of that plan. Whether we hit 10 percent remains to be seen."

While posting strong sales in the United States, Nissan faced several setbacks during the latter part of last year, recalling more than 1 million cars and slashing its annual profit forecast as sales slowed in key markets such as Russia and China.

In November, Ghosn inaugurated a $2 billion factory in Aquascalientes in central Mexico, which it aims to establish as an export hub in the Americas and help it produce cars more efficiently.

Nissan will build 175,000 Sentras at the plant, which it has said could be expanded.

Palmer said the automaker would need to add more capacity at the plant if Nissan achieves its sales targets. He said any decision to invest in more output would likely not come until the latter part of this year or in 2015. (Additional reporting by Laurence Frost in Detroit; editing by Jeffrey Benkoe and Matthew Lewis)

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