Following yesterday’s major announcement about the updated business plan of the Renault-Nissan-Mitsubishi alliance, Nissan is now detailing a new restructuring plan for its own operations. The new four-year plan should help the company “achieve sustainable growth, financial stability and profitability” by the end of fiscal year 2023.
Under the new strategy, Nissan will reduce its global production by 20 percent to approximately 5.4 million units per year, while the global product lineup of the brand will be reduced from the current 69 to a total of 55 models. This will force the automaker to close its Barcelona plant though a final decision hasn’t been made yet. Also, Nissan’s manufacturing plant in Indonesia will be closed as well and the company will concentrate its entire production in the ASEAN region in Thailand.
On the positive side, Nissan will introduce 12 new models in the next 18 months and will focus its efforts on the C and D segment vehicles, electric vehicles, and sports cars. EVs will play a significant role in the new strategy with Nissan aiming to sell more than one million electrified vehicles annually by the end of 2023.
“Our transformation plan aims to ensure steady growth instead of excessive sales expansion,” Makoto Uchida, Nissan chief executive officer, comments. “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.”
The focus on electrification will be supported by the introduction of the ProPILOT family of advanced driver assistance systems in more than 20 models in 20 markets globally. In general, Nissan will focus its core operations in Japan, China, and North America. In turn, it will leave South Korea, while the Datsun brand will be discontinued in Russia.
YOKOHAMA, Japan – Nissan Motor Co., Ltd. today unveiled a four-year plan 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.”
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:
1) Rationalization: robust actions to restructure, reduce costs and improve efficiency
- Right-sizing Nissan’s production capacity by 20% to 5.4 million units a year under the assumption of a standard shift operation
- Achieving plant utilization rate above 80%, making operations more profitable
- Rationalizing the global product line-up by 20% (from 69 to fewer than 55 models)
- Reducing fixed costs by approximately 300 billion yen
- Intend to close Barcelona plant in Western Europe
- Consolidating North American production around core models
- Closure of manufacturing facility in Indonesia and concentrating on Thailand plant as single production base in ASEAN
- Alliance partners to share resources, including production, models, and technologies
2) Prioritizing core markets and core products
- Focusing Nissan’s core operations in the markets of Japan, China and North America
- Leveraging the Alliance assets to maintain Nissan’s business at appropriate operational level in South America, ASEAN and Europe
- Exiting South Korea, the Datsun business in Russia and streamlining operations in some markets in ASEAN
- Focusing on global core model segments including enhanced C and D segment vehicles, electric vehicles, sport cars
- Introduce 12 models in the next 18 months
- Expanding 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, launching two more electric vehicles and four more e-POWER vehicles, increasing electrification ratio to 60% of sales
- 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.
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.”