Sweeping changes via ‘Nissan Next’ expected to right ship
Nissan Motor Co., Ltd president and CEO Makoto Uchida was laudably forthright during the Japanese car marque’s live (streamed via YouTube) press conference to present 2019 financial results, as well as reveal a four-year plan from FY 2020 to FY 2023 to “to achieve sustainable growth, financial stability and profitability” by the end of the period.
Amid the COVID-19 crisis gripping the world and its industries, Uchida reported that 2019 sales “decreased 10.6 percent to 4.93 million units given the significant slowdown in TIV (total industry volume) in the fourth quarter, as well as the decrease in sales primarily in North America and Europe in the first three quarters.” Still, the good news is that despite the decline, Nissan was still reportedly able to keep a 5.8-percent global market share – keeping with its projections.
Of course, one cannot gloss over the fact that Nissan last year saw significant operating loss of 40.5 billion yen, along with a net loss of 671.2 billion yen – reflecting the decrease in sales. “Net loss also includes costs associated with restructuring and impairments of 603.0 billion yen, as we focus on restructuring measures to improve the company’s profitability.”
While Uchida acknowledged that the pandemic “has deeply impacted financial activities” including those of the automotive industry, the executive admitted that “Nissan also has its own issues that have combined with these external factors and worsened (its) financial results.”
Surely, the company can’t wait to turn over a new leaf and bid adieu to its woes and the shameful episode with one Carlos Ghosn.
“For Nissan to overcome this situation, we must admit our mistakes and correct course. We must resolve the issue of redundant assets from which we do not expect sufficient returns,” declared Uchida. “We must therefore prioritize and focus by allocating resources to core markets and core segments. These are very difficult decisions. But these steps need to be taken decisively and without compromise.”
The executive said that Nissan will be more prudently eyeing “steady growth,” and scale back on its aspirations of “excessive sales.” The company will rationalize its operations by shuttering its manufacturing facilities in as Indonesia and Barcelona, and instead leverage its Thailand plant as a production hub. Underscored Nissan COO Ashwani Gupta, “As far as Nissan is concerned, we are going to use (the) Thailand plant for Asia, ASEAN, (and) for exports (to) other parts of the world.”
As for its product line, the company will pare the total from 69 to less than 55 models – a reduction expected to redound in greater competitiveness. “By the end of fiscal year 2023, we will discontinue older cars and trucks as well as models unique to a single region, (along with) withdrawing the Datsun brand in Russia.” Also part of the company’s rationalization moves include “rightsizing” production capacity by 20 percent to 5.4 million vehicles per year and reducing fixed costs by around 300 billion yen, and looking at alliance partners to share resources. Nissan will focus on what it calls “global core model segments, including enhanced C- and D-segment vehicles,” according to a release.
Meanwhile, the utilization rate of existing manufacturing facilities be will be upped to at least 80 percent to enhance operational profitability. It’s all about consolidation as well as a return to core competencies.
What should be of particular interest to Filipinos is that part of the “Nissan Next” vision may entail is vehicles rolling out of a, yes, Mitsubishi production line here. Its management team is looking at leveraging partnerships in the region in view of rationalization goals.
“Asia is a great market for us in terms of customers… products (and) partners which we have in this region. However, when we look at our capability and capacity to cater to the demand of this region, we do believe that we need a partner who is much stronger than us in this region,” revealed Gupta. “Our second biggest market in ASEAN is the Philippines where we enjoy great market share on the frame-based SUV and frame-based pickup.”
He quipped, “We don’t have a plant today, and we are now studying with Mitsubishi to utilize (its) plant in (the) Philippines so that we can localize our great products in the Philippines.”
Uchida also revealed the company’s move to prioritize core markets: Japan, China, and North America. Despite the consolidation moves, the company plans to “introduce 12 models in the next 18 months,” and grow its portfolio of electric vehicles and electric motor-driven cars… with “more than one million electrified sales units expected a year by (the) end of FY 2023.”
Concluded Uchida. “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.”