FILE - In this March 30, 2011 file photo, a 2011 Nissan Rogue is shown at Gladstone Nissan in Gladstone, Ore. The French-Japanese auto alliance of Renault and Nissan is investing $160 million in its South Korean Renault Samsung Motors to boost annual production by 80,000 vehicles, taking advantage of the nation's free trade agreement with the U.S. The investment, announced Friday, July 20, 2012 will be for the next-generation Nissan Rogue crossover sport-utility vehicle, starting production in 2014, with annual capacity of 80,000 vehicles. (AP Photo/Rick Bowmer, File)
FILE - In this March 30, 2011 file photo, a 2011 Nissan Rogue is shown at Gladstone Nissan in Gladstone, Ore. The French-Japanese auto alliance of Renault and Nissan is investing $160 million in its South Korean Renault Samsung Motors to boost annual production by 80,000 vehicles, taking advantage of the nation's free trade agreement with the U.S. The investment, announced Friday, July 20, 2012 will be for the next-generation Nissan Rogue crossover sport-utility vehicle, starting production in 2014, with annual capacity of 80,000 vehicles. (AP Photo/Rick Bowmer, File)
TOKYO (AP) ? The French-Japanese auto alliance of Renault and Nissan is investing $160 million in its South Korean Renault Samsung Motors to boost annual production by 80,000 vehicles, taking advantage of South Korea's free trade agreement with the U.S.
The plant in the southern city of Busan is now making 180,000 vehicles a year, sold in South Korea and 60 other nations. Renault's sole Korean plant has capacity of 300,000 vehicles a year but Renault cut production as sales slumped at home and abroad.
The investment, announced Friday, will be for the next-generation Nissan Rogue crossover sport-utility vehicle, starting production in 2014, with annual capacity of 80,000 vehicles, mostly destined for North American markets.
The move to beef up production in South Korea is unique among major Japanese automakers. Toyota Motor Corp. and Honda Motor Co. do not have plants in South Korea.
The move is also noteworthy for taking advantage of a trade deal that Japan lacks. South Korea is ahead of Japan in such deals, and already has a free trade agreement with the U.S., and is negotiating deals with Canada and Mexico, where the Rogue is also headed.
Renault Samsung Motors was the first European carmaker to set up operations in South Korea. In 1994, Nissan formed Samsung Motors Inc. with Samsung Group. In 2000, Renault SA of France purchased 70.1 percent of the bankrupt Samsung Motors, in the wake of the Asian financial crisis, and renamed it Renault Samsung. Renault now owns 80.1 percent of the manufacturer.
"The Busan announcement represents a unique win-win-win' for Renault, Nissan and RSM, demonstrating the flexibility and power of the alliance for all partners," said Carlos Ghosn, chief executive for both Nissan Motor Co. and Renault SA. Ghosn is scheduled to elaborate on the plan during a news conference in Seoul at 0900 GMT.
Analysts said the investment is Renault's quick fix for its ailing South Korean unit, which has been squeezed by nimble rivals Hyundai Motor and Kia Motors.
"It appears to be an emergency patch to push the factory operation back to the normal level, but it doesn't appear to be a long-term strategy," said Bok Deuk-kyu, a senior analyst at Samsung Economic Research Institute in Seoul.
The French carmaker had risen to No. 2 by market share in South Korea in 2003 thanks to the popularity of its SM5 model. But in recent years, it has lagged behind Hyundai, Kia and GM Korea, and is closely trailed by Ssangyong Motor.
The investment comes at a difficult time for Renault Samsung. In 2011, it lost 292 billion won ($256 million) and a plunge in sales had even set off speculation that Renault may sell the South Korean unit. Ghosn said the announcement underlined its commitment to Renault Samsung.
Its South Korean sales in the first half of this year plunged 33 percent from the same period a year earlier to 83,062 vehicles. Last month, South Korea's smallest auto player Ssangyoong Motor Co. sold more cars than Renault Samsung.
All automakers are eager to boost their business in rapidly growing Asia.
Renault Samsung is still a key part of Renault's effort to grow in Asia. Renault expects to sell more than half of its vehicles outside of Western Europe next year, up from 37 percent in 2010. Renault is aiming for 10 percent market share in South Korea, up from 4.4 percent in the first half of this year, and 7 percent last year.
The alliance between Renault and Nissan was born in 1999, when Nissan was near bankruptcy.
Ghosn, who was sent in by Renault to turn around Nissan, is revered as a management role-model in Japan. Under Ghosn, Nissan has returned to strong growth, despite setbacks last year from the earthquake and tsunami disasters in northeastern Japan. The Renault-Nissan alliance sold a record 8.03 million vehicles worldwide last year.
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Youkyung Lee in Seoul contributed to this report. Follow Lee on Twitter at http://twitter.com/_ylee and follow Yuri Kageyama at http://twitter.com/yurikageyama
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