Nissan: Learn From Earthquake, Grow Global Share
Nissan has big plans for the next six years, and some of it comes in hindsight. The company's new six-year business plan, "Nissan Power 88," means that by the end of fiscal 2016, if all goes as planned, Nissan will have a global market share of 8% and increase its corporate operating profit to "a sustainable" 8%.
A corporate statement said the plan includes an aggressive strategy of an all-new vehicle every six weeks for six years, meaning the global portfolio will comprise 66 vehicles covering 92% of all markets and segments at the end. The company also said cumulative electric vehicle sales for the Renault-Nissan Alliance will have reached 1.5 million units by then, if the plan pans out.
Also in the works is a retail expansion plan, from 6,000 "major points of sales" globally to 7,500 in the mid-term plan period. China is Nissan's largest single market, and the company said it wants 10% of auto market share there, with expansions in Brazil, Russia and India.
The Power 88 plan also involves growing Infiniti share from 150,000 vehicles last year to 10% of global luxury-vehicle market share, meaning 500,000 vehicles in terms of today's global auto picture. The global strategy for Infiniti is to put the brand in more than 70 markets with a product range of at least 10 vehicles.
Carlos Ghosn, president and CEO of the Yokohama, Japan-based company, said it has also installed corporate fail-safe structures learned from this year's earthquake and tsunami. He also said the earthquake forced a change of outlook for this year.
"I had to announce that maybe in 2011 we could be selling more cars in 2011 than in 2010, but I was not sure because we did not have a clear picture about the amount of damage yet in our plants and at the level of suppliers," he said. But he added that the company is now mostly back up to production speed. "Obviously, [production] it is restricted as there are some engines that still are limited or some version or specification that we cannot make."
Ghosn also said the earthquake offered a corrective in how not to build a supplier network, since the company had second-tier suppliers damaged by the quake. Some of those essentially shut down vehicle manufacture for whatever model the part was bound.
Said Ghosn: "We discovered through the crisis that we still have an abnormal level of dependency on a very limited number of suppliers with a very limited number of plants ... it was difficult to see because these were not our first-ranked suppliers. These were suppliers ranked two or three, which means these were suppliers of our suppliers." He said that not only were some of these suppliers the only ones supplying the part, they were sometimes supplying them from only one plant. "So, if something was happening at the plant, we were stuck as a company. We learned it during this crisis, and we're going to organize ourselves for this to never happen again."
He said the company will do a couple of things to reduce risk: multi-source parts and localize production. For starters, he said the company will no longer allow one supplier to have a monopoly relationship with the company. But "if we accept him to be in a position of monopoly, then he has to have at least two different sourcings," he said.
And he said that if a vehicle is sold in China, it needs to be built there. "Every time we have dependency on other countries, we have very complicated supply chains ... it just makes your supply chain extremely vulnerable to any surprise. So, this was a good opportunity to reinforce the fact inside Nissan of the necessity of localizing as much of our production in the main markets we are competing in."