WSJ: Nissan looks to China to revitalize Infiniti brand

By Chester Dawson of THE WALL STREET JOURNAL

YOKOHAMA, Japan (Dow Jones) -- Nissan Motor Co. (NSANY, 7201.TO) is looking to China's burgeoning luxury car market for a new lease on life for its struggling Infiniti brand, with plans to manufacture two models in China and to sell stretch luxury cars designed for affluent Chinese.

Nissan will debut a new version of its midsize Infiniti M 35 hybrid sedan at the Beijing Motor Show on Monday with an extended wheelbase that is designed to appeal to chauffeured Chinese car owners. It also plans to produce two upscale models at one of its factories in China, Andy Palmer, an executive vice president who oversees Infiniti, said in an interview.

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"We will localize two cars from 2014 and they will be specific to China," Mr. Palmer said, declining to specify which types of cars, other than to say they will be high volume, entry-level luxury models, or in which Chinese plant they will be made. The vehicles will be built with its Chinese partner, Dongfeng Motor Group Co. (0489.HK, DNFGY).

Japan's No. 2 auto maker says it wants to position Infiniti globally to attract younger, wealthier buyers with an appreciation of Asian sensibilities such as "motenashi"--a Japanese term for hospitality. The test market for that new vision is China.

Producing in China will allow Nissan to avoid a high tax on luxury imports and cut production costs. It currently exports all Infiniti models sold in China from Japan, where the strong yen has eroded profit margins and reduced the price competitiveness of its vehicles.

Last year, Chinese sales of Infiniti models nearly doubled to 19,075 vehicles and Nissan expects sales to hit 100,000 in four years. That's as many as it sold in the U.S. last year and a big chunk of the 500,000 luxury vehicle goal that CEO Carlos Ghosn has vowed to sell globally by 2016. To get there, Mr. Palmer said Nissan will expand its dealerships to 148 from the current 50 showrooms.

But some industry analysts doubt Infiniti can grow that quickly in China. "Based on our forecasts, we think sales of around 65,000 units by 2016 would be a more achievable target," said Lin Huaibin, Shanghai-based head of China vehicle sales forecasts at researcher IHS Automotive.

Two decades after its launch in 1990, Infiniti has struggled to break out of niche status and has lagged its Japanese rivals, Honda Motor Co.'s (HMC, 7267.TO) Acura and Toyota Motor Corp.'s (TM, 7203.TO) Lexus. Last year, it had just 6.8% of the U.S. luxury market, compared with 8.5% for Acura and 13.7% for Lexus, according to Nike Hypervenom Phantom