Using a digital conference platform from their head office in Yokohama, Japan, Nissan Motor Co., Ltd. (NML) unveiled a four-year “transformation plan” to achieve sustainable growth, financial stability and profitability by the end of fiscal year 2023. The plan was designed to shift Nissan’s strategy from its past focus on inflated expansion to its new focus on cost-rationalization and business optimization.
To do this, Nissan plans to take decisive action by streamlining unprofitable operations and surplus facilities along with structural reforms. Nissan plans to reduce fixed costs by rationalizing its production capacity, global product range, and expenses. Through disciplined management, the company will prioritize and invest in business areas expected to deliver a solid recovery and sustainable growth. Nissan aims to achieve an operating profit margin of 5% and a sustainable global market share of 6% by the end of fiscal year 2023. They also plan to get proportionate contributions from their 50% equity joint venture in China.
Nissan chief executive officer (CEO) Makoto Uchida said, “Our transformation plan aims to ensure steady growth instead of excessive sales expansion. We will now concentrate on our core competencies and enhancing the quality of our business, while maintaining financial discipline and focusing on net revenue per unit to achieve profitability. This coincides with the restoration of a culture defined by ‘Nissan-ness’ for a new era.”
Uchida expounded that the four-year plan is focused on two strategic areas. The first strategy centers on harnessing “Nissan-ness” or Nissan’s reputation for innovation, craftsmanship, customer-focus and quality. The second strategy focuses on an ongoing cultural transformation to ingrain this “Nissan-ness” into their products and people.
To rationalize their operations, Nissan listed several actions plans to restructure operations, reduce costs, and improve efficiency. They plan to right-sizing their production capacity by 20%, from 7 million to 5.4 million units a year (under the assumption of a standard shift operation) and achieve more than 80% plant utilization rate to make operations more profitable. Nissan also plans to reduce their global product line-up from 69 to fewer than 55 models.
NML plans to reduce fixed costs and save approximately 300 billion yen and intend to close the Barcelona plant in Western Europe and consolidate North American production around core models. For Asia, they will close their manufacturing facility in Indonesia and utilize their Thailand plant as single production base for the ASEAN market. They also plan to rally their alliance partners, Renault and Mitsubishi, to share resources, including production, models, and technologies to further defray costs.
To prioritize their core competencies in core markets with their core products, Nissan plans to focus in their home market of Japan, as well as China and North America, which they identified as their largest markets. They will leverage the Alliance assets to maintain Nissan’s business at appropriate operational levels in South America, ASEAN and Europe.
Nissan Chief Operating Officer (COO) Ashwani Gupta gave their Philippine operation as an example. “The market in the Philippines is robust with frame-based vehicles like pickup trucks and SUVs. We plan to utilize our strategic partnership with Mitsubishi and perhaps build a common platform for pickups and SUVs, and manufacture these vehicles in their factory in the Philippines, (referring to the Mitsubishi Philippines plant in Santa Rosa, Laguna).”
To combat sluggish sales and streamline operations, NML plans to stop their South Korean operation, close Datsun in Russia and manage some ASEAN markets more closely. To attract more customers, Nissan plans to focus on global core model segments, enhance their line-up of C- and D-segment vehicles, electric vehicles (EVs) and sport cars. They plan to introduce 12 new models in the next 18 months.
To help protect the environment, Nissan plans to expand the brand’s presence in EVs and electric-motor-driven cars, integrate e-Power electric drive into more models, and sell more than 1 million EVs by the end of 2023. In Japan, Nissan will launch two more EV models and four more e-Power vehicles to increase the electrification ratio to 60% of sales.
To add convenience and safety to motoring, Nissan plans to introduce ProPilot advanced driver assistance system in more than 20 models in 20 markets. They plan to equip more than 1.5 million units with the ProPilot system per year until the end of 2023.
Nissan CEO Uchida concluded the online conference by saying, “Nissan must deliver value for customers around the world. To do this, we must make breakthroughs in the products, technologies and markets where we are competitive. This is Nissan’s DNA. In this new era, Nissan remains people-focused, to deliver technologies for all people and to continue addressing challenges as only Nissan can.”