Nissan's global business transformation plan is “on track”, the Japanese car maker's global chief operating officer Ashwani Gupta said on Tuesday.
The Nissan Next transformation plan, which was unveiled in May 2020, is based on rationalisation, Mr Gupta said during a media roundtable in Dubai. The plan also focuses on quality sales and investing for future growth.
“We targeted $3 billion worth of fixed-cost reduction in three years. We have now achieved more than $3.5bn worth of fixed-cost reduction in one and a half years,” Mr Gupta said.
The car manufacturer, which posted losses earlier this year and in 2020 after the abrupt downfall of its former chief Ghosn and the onset of the Covid-19 pandemic, is returning to profit and has also transformed its culture from volume to value for all regions, Mr Gupta said.
“At that time, we targeted net revenue per unit to improve by 10 per cent. We have now achieved 11 per cent,” he said.
Nissan's management also believed that cost cutting has to be accompanied with investment in the right technology and products. The car manufacturer released 12 products globally in 18 months, Mr Gupta said.
Nissan, which is part of an alliance that includes French car maker Renault and smaller Japanese car company Mitsubishi Motors, also applied the change in mindset as part of its restructuring to the partnership.
“As part of Nissan Next, we went for a cultural change in the alliance mindset from ‘synergies for synergies’ to ‘synergies for performance’. Moving forward, electrification is the new pillar to boost synergies among the three companies. We will share synergies on battery, electric platform and the power train,” Mr Gupta said.
Nissan owns 15 per cent of Renault, which holds a 43 per cent stake in Nissan. The government of France owns 15 per cent of Renault.
The company recently faced a series of trials, from weak demand during the pandemic to the fallout from the arrest of former boss Carlos Ghosn, now an international fugitive after he jumped bail and fled Japan.
The electrification of its fleet is a major plank of Nissan’s Ambition 2030 plan, according to Mr Gupta. The other pillars underpinning this initiative are self-driving technology and digitalisation.
“We will have 100 per cent electrified offerings by 2030,” he said.
Nissan was the first car maker to unveil the battery electric car Leaf in 2010. As part of its electrification plans, Nissan committed to invest 2 trillion yen ($18 billion) in the next five years in its product line-up, the electrification of plants and establishment of battery plants around the world.
The car maker aims to have a battery capacity of more than 50 gigawatts by 2026 and more than 130 gigawatts by 2030, according to Mr Gupta.
“We aim to increase our profitability by 5 per cent after this investment,” he said.
“We should not do electrification for the sake of electrification. We have full confidence in a smooth transition from ICE [internal combustion engines] to power engines.”
Referring to how customers in Europe are taking the lead in electric vehicle adoption, Mr Gupta attributed it to a lower total cost of ownership of a battery-powered car versus an ICE car.
However, in the US and Middle East, the cost of ownership of an EV and operational costs are high, he said.
“We need to make sure electrification is competitively priced to benefit the customer,” he said.
Nissan also announced that it will become carbon neutral across its entire product life cycle by 2050. In that regard, it announced plans to build the UK’s first car battery “gigafactory” with an investment of £1bn ($1.4bn) in July this year.
The Japanese car maker aims to achieve a 20 per cent market share in the GCC in 2022 fiscal year. Refusing to disclose the region’s current market share, Mr Gupta said the company enjoys a better profit and market share than the global average.
“The majority of the market share is driven by [our] Patrol [model]. This region needs very strong, robust and durable sports utility vehicles with advanced technology. The Pathfinder is complementary to the Patrol,” he said.
Referring to the global chip shortage plaguing car makers, Mr Gupta said: “Two years before the pandemic, our challenge was how to sell. Now, our challenge is how to produce. The more we produce, the more we sell.”
Nissan was forced to cut 22 per cent of its production in October this year and also a certain percentage in November owing to the chips shortage, he said.
“This will continue until at least the first half of the 2022 fiscal year. It should get better,” Mr Gupta said.
He also cited the Suez Canal traffic jam, lockdowns in South-East Asia and Japan quarantine measures as other reasons that contributed to delays in Nissan’s production supply chain.