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Nissan doubles production in Russia to counter ruble decline

Nissan doubles production in Russia to counter ruble decline

Nissan is boosting production in Russia as the collapse in the ruble hits its profits. The company started production of its X-Trail SUV at its St. Petersburg factory this week and will add the Qashqai next year as part of a  €167 million investment that has doubled the plant’s annual capacity to 100,000 units.

Colin Lawther, Nissan Europe’s head of manufacturing, said exporting the Qashqai to Russia from the company’s Sunderland, England, factory is “is not as attractive as it once was.”

“The ruble is just crazy at the moment and beyond everyone’s expectation,” he added.

The weakening ruble is causing “a lot of stress” to automakers importing cars into the country, Lawther said.

A Toyota Europe spokesman also said the ruble’s decline is “having a negative effective on our overall European profitability.”

The Toyota RAV4 SUV is Russia’s top-selling imported passenger vehicle with sales of 34,114 through November, according to data from the Association of European Businesses in Russia (AEB).

For Nissan, Russia is one of the Qashqai’s two biggest markets along with the UK, and the crossover is Nissan’s No. 2-seller there after the locally built Almera compact sedan. Nissan sold 27,323 Qashqais, 22,251 X-Trails and 42,220 Almeras in Russia through November.

Lawther said the exchange rate issue will be less important when Nissan starts building the Qashqai in St. Petersburg at the end of next year. Nissan prioritized local production of the new X-Trail SUV over the Qashqai.

By 2016, 90 percent of the cars Nissan sells in Russia will be built in the country. The automaker builds the Murano and Pathfinder large SUVs, and the Teana midsize sedan at the factory.

Lawther said Nissan still makes a profit selling the Qashqai in Russia despite the ruble’s declining value.

Russian-built vehicles qualify for scrappage discounts from a government program to support the auto industry. The program helped to limit a decline in new-car sales to 1 percent in November compared with 10 percent in October. Through November, sales are down 12 percent to 2.22 million, according to the AEB.