April 25, 2016 / 9:02 AM / a year ago

Nissan expects China's no-frills demand to accelerate sales growth

Nissan's logo is pictured on an engine of Maxima model during the Auto China 2016 auto show in Beijing, China April 25, 2016. REUTERS/Kim Kyung-Hoon

BEIJING (Reuters) - Nissan Motor Co’s (7201.T) China sales will outpace the country’s overall annual market growth rate by two to three percentage points from next year as it refocuses on its no-frills brand, a company executive said at the Beijing autoshow.

Demand has been strong for no-frills vehicles in the world’s biggest auto market, helping to erode the market share of foreign car makers in China. That has prompted Japan’s Nissan to launch more cars under its own budget brand, Venucia.

Foreign global automakers accounted for more than 65 percent of China’s passenger car market until 2014, Jun Seki, Nissan’s China chief told Reuters on Monday. That fell to below 60 percent last year, and it continued to shrink to 56 percent in the first quarter of this year, he said.

“We hadn’t really seen this trend coming, but since late 2014 and the start of last year, we began adjusting our strategy,” Seki said.

Seki said that the firm’s underestimation of the rapid growth in no-frills brands would likely limit Nissan’s China sales expansion at 5 percent on a yearly basis this year, lagging the 6 percent growth for the sector forecast by the China Association of Automobile Manufacturers (CAAM).

In response to the no-frills demand, Seki said that Nissan is now gearing up to launch new cars from its Venucia range, a joint venture brand between Nissan and China’s Dongfeng Motor Co Ltd (0489.HK) with one model to hit the market late this year and more in 2017 and beyond, Seki said.

The Japanese automaker views 2016 as a “bridge year”, as it is refocuses on Venucia while improving the Nissan-brand product line, he said.

The company said in February that it and its Chinese joint venture partner aim to sell a total of 1.3 million vehicles in China this year, compared with 1.25 million in sales recorded in 2015.

Reporting By Norihiko Shirouzu; Writing By Winni Zhou; Editing by Muralikumar Anantharaman

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