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Nissan to Assemble Murano at MS

Zacks Equity Research

Nissan Motor Co. (NSANY) announced that it will start assembling its Murano crossover vehicle in the Canton, MS plant from 2014. Murano crossover will be the eighth model produced in the plant.

Nissan manufactures Altima and Sentra sedans, Armada and Xterra SUVs, Titan and Frontier pickup trucks and NV vans in the Canton plant. This wide range of vehicles produced in the plant provides flexibility to the company to adjust production with the demand. The Murano crossover will be assembled on the pickup trucks line.

The Canton plant has a capacity of producing 450,000 vehicles each year. Last year, the company produced only 233,000 vehicles in the plant. The company expects to operate at its full capacity in this year given the increased market share.

This company’s decision to assemble the crossover is expected to generate 400 additional jobs at the plant, which currently employs 5,200 workers. However, the Mississippi government will not provide any additional incentives to the company for this initiative.

Nissan recognizes that workers play an important role in production endeavor. The company also plans to create an opportunity by converting the lower paid workers on contract basis to full-time employee of the company.

The Murano vehicle is currently produced in Kyushu, Japan. The company’s strategy of shifting production from Japan to the U.S. will reduce the risks associated with currency conversion. In addition, Nissan plans to manufacture 85% of its U.S. sales volume in North America by 2015.

Nissan, one of the largest automaker in the world, reported a 7.7% increase in profits to ¥106.0 billion ($1.35 billion) or ¥25.30 (32 cents) per share in the second quarter of fiscal 2012, ending March 31, 2013, from ¥98.4 billion or ¥23.52 per share in the corresponding quarter last year. However, earnings per share missed the Zacks Consensus Estimate of 58 cents per share.

Revenues went up 5.5% year over year to ¥2.41 trillion ($30.67 billion) in the reported quarter, driven by an 8.3% increase in unit sales to 1.27 million vehicles globally. The year-over-year improvement in unit sales was attributable to higher sales volume in Asia and North America, partly offset by lower sales in Japan and Europe.

Nissan Motor competes with Honda Motor Co. (HMC) and Toyota Motor Corporation (TM). Currently, it retains a Zacks Rank #4 (Sell).

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