Nissan to focus on electric, sport cars under sustainability plan

03 / 06 / 2020

By Ahmed Abdel Qawi - - | Edited by Marwa Nassar

Nissan Motor Co., Ltd. will focus on production of global core model segments including enhanced C and D segment vehicles, electric vehicles and sport cars under its four-year sustainability plan which has been announced recently.

The company is expected to introduce 12 models in the next 18 months.

It will also expand the presence in EVs and electric-motor-driven cars, including e-POWER, with more than 1 million electrified sales units expected a year by end of FY23.

In Japan, the company is scheduled to launch two more electric vehicles and four more e-POWER vehicles, increasing electrification ratio to 60% of sales.

Moreover, it will also introducing ProPILOT advanced driver assistance system in more than 20 models in 20 markets, targeting more than 1.5 million units to be equipped with this system per year by the end of FY23.

Nissan’s four-year plan is meant to achieve sustainable growth, financial stability and profitability by the end of fiscal-year 2023. The scalable plan, involving cost-rationalization and business optimization, will shift the company’s strategy from its past focus on inflated expansion.

As part of the four-year plan, Nissan will take decisive action to transform its business by streamlining unprofitable operations and surplus facilities, alongside structural reforms.

The company will also 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.

By implementing the plan, Nissan aims to achieve a 5% operating profit margin and a sustainable global market share of 6% by the end of fiscal year 2023, including proportionate contributions from its 50% equity joint venture in China.

Makoto Uchida, Nissan chief executive officer, 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.”

Nissan sustainability plan based on two axis:

The four-year plan is focused on two strategic areas, building on Nissan’s reputation for innovation, craftsmanship, customer-focus and quality, alongside an ongoing cultural transformation.

The first strategic axis is “rationalization” under which the company will take robust actions to restructure, reduce costs and improve efficiency.

Within this context, the company will right-size its production capacity by 20% to 5.4 million units a year under the assumption of a standard shift operation.

It will also work on achieving plant utilization rate above 80%, making operations more profitable.

It will also seek rationalizing the global product line-up by 20% (from 69 to fewer than 55 models).

It will also reduce fixed costs by approximately 300 billion yen in addition to plans to close Barcelona plant in Western Europe and manufacturing facility in Indonesia.

The company will work on consolidating North American production around core models, concentrating on Thailand plant as single production base in ASEAN in addition to alliance partners to share resources, including production, models, and technologies.

The second axis is prioritizing core markets and core products.

Under this axis, the company will focus its core operations in the markets of Japan, China and North America and leverage the alliance assets to maintain Nissan’s business at appropriate operational level in South America, ASEAN and Europe.

The company will seek exiting South Korea, the Datsun business in Russia and streamlining operations in some markets in ASEAN.

Uchida concluded: “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.”