Nissan CEO Says Carmaker Needs To Boost U.S. Production

ATSUGI, Japan (AP) - Nissan needs to boost production capacity in the United States to meet growing demand for new models but is under no pressure to merge with a new partner following the break-up of alliance talks with General Motors, chief executive Carlos Ghosn said Tuesday.

His comments follow stalled talks between Nissan, France's Renault and U.S. automaker General Motors Corp. on a merger that would have produced an automotive juggernaut spanning North America, Europe and Asia.

Nissan Motor Co. was seen as pursuing a partnership with Detroit-based GM to take advantage of using some of factories that its American rival was bringing off line amid widespread downsizing. Ghosn said Tuesday that Nissan still needed boosted capacity in North America but that a slowing market would put that on hold.

''There is no doubt in our mind, depending on the environment, that at a certain point of time, we're going to need more capacity. The question is when,'' said Ghosn, who was in Atsugi, southwest of Tokyo, for the opening of Nissan's new design studio complex, which will become the central hub for about two-thirds of its worldwide auto designers.

Ghosn said Nissan is ''not foreseeing any better conditions'' in the U.S. auto market next year, compared with an already sluggish environment in 2006 and said any increase in production capacity would be long-term.

Regarding the search for a possible merger partner, Ghosn said Nissan and its French partner Renault have a combined annual output of roughly 6 million vehicles, together making them the world's No. 4 carmaker.

Nissan formed an alliance with Renault SA in 1999. Renault owns a 44 percent stake in Nissan, which in turn holds 15 percent of the French auto maker.

Ghosn held open the possibility of a further merger, but said it would depend on other factors. He did not name any potential candidates.

In early October, GM torpedoed three months of negotiations with Renault and Nissan. The talks ended when GM sought payment from the other two companies for what it said would have been a disproportionate share of the benefits of an alliance.

Proponents argued that the alliance would create significant savings, but critics said it could be a distraction from GM's efforts to return to profitability.

While Ghosn was coy about further mergers, other Nissan executives have been more eager. Dominique Thormann, Nissan North America's senior vice president for administration and finance, said last week that the talks with GM showed that expanding to a third party ''makes sense.''

Ghosn has been upbeat recently about the benefits of the Nissan-Renault pact, saying Renault's market capitalization, or the total value of its shares, has tripled, while Nissan's has grown fivefold. The companies also make 72 percent of their purchases jointly.

Ghosn said the new high tech design center was needed to help cut production time needed to roll out new models. Since 2001 Nissan has cut its lead time on new models by half, Ghosn said.

The new design studio, called the Project Imagination Factory, will employ about 600 of the company's 900 design staff.