NISSAN GT 2012 and Fiscal Year 2007 Results
Press conference
May 13, 2008
Carlos Ghosn, President & CEO, Nissan Motor Co., Ltd.


For fiscal year 2007, Nissan is reporting increases in revenue, operating profit, and net income. Nissan employees performed at a high level to face strong headwinds and keep our company on track in a challenging year for the auto industry.

Today I will review our business performance from the past year and our outlook for 2008, and I will provide a summary of our performance during NISSAN Value-Up. The majority of my remarks will focus on our new business plan, which we began implementing on April 1.

Fiscal year 2007 performance

In fiscal year 2007, Nissan released 11 all-new models globally and successfully. Outstanding models included the GT-R supercar, Rogue and Infiniti G37 Coupe.

Global sales came to 3.77 million units, up more than 8% over fiscal year 2006.

In Japan, sales reached 721,000 units, a 2.5% decrease in an industry that was down 5.3%. Nissan's market share increased, to 13.6%.

In the United States, sales were 1,059,000 units, up 3% in a market that was down 3.5%. Our market share increased to 6.7%, our highest so far.

In Europe, sales were up 17.9%, at 636,000 units. Our European market share rose to 2.9%.

In the General Overseas Markets, sales were up 22%, to 1,061,000 units. Middle East sales were up 36%, to 198,000 units. Sales in China were up 26% to 458,000 units, while the market was up 22%.

In fiscal year 2007, we launched 10 important technologies. I will highlight four of them:

  • the advanced Variable Valve Event & Lift engine technology, which reduces CO2 emissions and improves torque output by 10%;
  • Pop-up engine hood technology, which minimizes the impact to a pedestrian's head by lifting the engine hood in the event of a collision;
  • Around View Monitor technology, offering the driver a bird's-eye view of the vehicle and its surroundings in real time; and
  • the Lane Departure Prevention System, which helps the driver to stay inside the lane.

Fiscal year 2007 financial performance

Reviewing our consolidated financial performance in fiscal year 2007, Nissan's consolidated net revenues were 10.824 trillion yen, up 11.6% versus the prior year.

Consolidated operating profit was 790.8 billion yen, compared to 755.5 billion yen in fiscal 2006, up 4.7%. The increase in operating profit is due to the effect of significant volume growth.

As a percentage of net revenue, our operating profit margin came to 7.3%.

Net income reached 482.3 billion yen, up 7.4%, compared to 449.2 billion yen in fiscal year 2006.

We had a net cash position of 180.3 billion yen at the close of fiscal 2007 and generated free cash flow of 456.7 billion yen.

We will propose a 20-yen-per-share year-end dividend to our shareholders, giving a full-year dividend of 40 yen per share, as initially planned.

Fiscal year 2008 outlook

As we begin the first year of our new business plan, I would like to review our outlook for fiscal year 2008.

Nissan's sales are forecast to reach 3.9 million units, a 3.5% increase over 2007. Growth will come from General Overseas Markets and Eastern Europe, including Russia.

In fiscal year 2008, we will launch nine all-new models globally. They are:

  • Teana in Russia, Japan and China in June;
  • Infiniti FX in the United States in June;
  • Maxima in the United States, also in June;
  • Qashqai+2 in Europe in September;
  • Bakkie successor in General Overseas Markets in October;
  • Mini SUV in Japan in late October;
  • Cube in Japan in November;
  • Fairlady Z in Japan in December; and
  • Infiniti G37 Convertible in the United States in February 2009.

By now, you have heard the other automakers cite the risks and opportunities in our industry for the coming year, so I will not repeat them.

In light of our outlook for fiscal year 2008, we have filed our forecast with the Tokyo Stock Exchange, using a foreign exchange rate assumption of 100 yen per dollar.

Net revenue is forecast at 10 trillion 350 billion yen.

Operating profit is expected to be 550 billion yen.

Ordinary profit is expected to reach 545 billion yen.

Net income is forecast at 340 billion yen.

Capital expenditures are expected to reach 470 billion yen.

NISSAN Value-Up summary

Before I introduce the business plan we will follow for fiscal years 2008 through 2012, I will summarize our performance during NISSAN Value-Up.

From its outset, NISSAN Value-Up was designed to keep the value up - to sustain and build upon the foundations laid during the Nissan Revival Plan and NISSAN 180.

If I were to grade each plan, I would give the Nissan Revival Plan better than a full score because all our commitments were met a full year in advance.

NISSAN 180 was a full score.

NISSAN Value-Up was not a full score, but it was still a very good score.

Our first NISSAN Value-Up commitment was to deliver a top-level operating profit margin, and, although it is not as high as we would have liked it to be, we continue to maintain a margin at the top level in our industry.

Our second commitment was 4.2 million unit sales. As we announced last year, that achievement will be moved to fiscal year 2009 as a milestone in the new plan.

As a consequence, our return on invested capital averaged 17% over the plan's three years, which is at the top level among global automakers, but below our committed 20% mark.

Introduction of NISSAN GT 2012

Through NISSAN 180 and NISSAN Value-Up, Nissan has grown systematically and consistently. Compared to 2001, total revenue grew 75%, from 6.2 trillion yen to 10.8 trillion yen. Nissan's sales volume increased 45%, from 2.6 million cars to 3.77 million units today.

We have restored our company's profitability and built a solid foundation and a complete infrastructure from which growth can continue.

And that is what we intend to do.

Our new plan, which is named NISSAN GT 2012, emphasizes growth and trust. The length of this plan - five years instead of three - is different from previous plans, and so is its purpose. Since Nissan is now a normal, healthy company, we have the opportunity to take a longer view and align our growth plans with our desires to contribute to the sustainable development of mobility. As we grow, we want to enhance the relationships of trust we have with all our stakeholders.

What are the drivers of NISSAN GT 2012? We have three corporate commitments.

The first commitment is about quality, which is essential for a world-class automaker and the integrity of its brands. The core of this commitment is quality leadership - certainly for our products, which is essential to maintain our customers' trust, and also quality of our services, our brand, our management and our company overall. By leadership, we mean there will be no tangible difference between Nissan's performance and any category leader.

Nissan will accelerate quality improvement efforts in all areas, including perceived quality and attractiveness, product quality, sales and service quality, and quality of management.

In each region, influential external indicators that directly reflect customer opinions will be analyzed along with our internal indicators. Those measures will confirm that our internal indicators are fully aligned with our customers' perceptions of quality in each region.

A key corporate indicator of product quality is customer warranty claims, as measured by three-months-in-service data. We expect higher levels of customer satisfaction to drive our warranty claims down by 50% by 2012.

Our second commitment is linked to the reality of how our world is changing and how we plan to contribute to those changes. We see evidence of two prominent trends - namely, the rapid emergence of developing markets and the recognized need for environmental solutions.

This chart shows how the global total industry volume has grown since 1990, from 46 million to 69 million vehicles, an increase greater than 65%.

If you look at the ratio of the number of vehicles to the number of inhabitants in various countries around the world, you can imagine how this growth will continue. Today, the United States has 800 vehicles per 1,000 persons, and other mature markets, such as Japan, the United Kingdom, Germany and France, have about 600 vehicles per 1,000 persons. In the BRIC countries, Russia has 250 vehicles per 1,000, Brazil has 150, and two of the highest populated countries in the world - India and China - have fewer than 50 per 1,000, which means there is room for tremendous growth. In these markets, growth will exceed foreseen declines in most mature markets. In fact, this trend has already started. In 2007, the total industry volume globally increased 6.1% even though Western Europe was flat, the U.S. market was down 3.5% and Japan was down 5.3%.

Now, recognizing the potential growth in world markets, what is the right offer? Potential growth means more cars on more roadways in more countries while everyone is watching the impact on oil availability and pricing and the impact on CO2 emissions. There is a perceived conflict between the demand for more cars and the demand for a cleaner planet.

Ten, 20 or 30 percent lower emissions cannot be the only answer, although clean diesels, hybrids, downsized engines and other technologies are important steps in the technological evolution. Near-zero emissions is also only part of the answer. For an automaker, the best way to address both trends over the long term is through zero-emission vehicles, which are totally neutral to the environment.

For Nissan, this is a core element of our strategy deriving from the Alliance strategy.

Therefore, the second commitment of NISSAN GT 2012 is for Nissan, along with Renault, to become a global leader in zero-emission vehicles. We will introduce an all-electric car in 2010 in the United States and Japan, and we will mass-market it globally in 2012. Through the Alliance, we have also signed an agreement to mass-market electric vehicles in Israel in 2011, and an agreement with Denmark will soon follow.

We will not bring only one product; we will offer a range of high-quality products that are safe, well engineered, attractive and fun to drive.

Today there is latent demand, but no offer. Nissan has an opportunity to mass-market an affordable car that is both independent from oil and environmentally neutral, and this is our second commitment.

The third commitment of NISSAN GT 2012 is to achieve 5% revenue growth on average over the five years of the plan.

Our revenue growth will be supported by our product plan, which will launch 60 new models by fiscal year 2012 - that is an average of one new model a month for the next five years. Two-thirds will replace existing models, and one-third will expand our global offer. A steady cadence of passenger vehicle launches is planned, with a global Light Commercial Vehicle (LCV) acceleration in 2010. Today 21% of the world's markets are out of our reach because of a lack of products or a lack of geographic presence. By fiscal year 2012, we will be in nearly every market, in nearly every segment.

As with prior plans, we will communicate a multi-year dividend policy to our shareholders. We are confident about our own performance, but we are prudent about the challenging and volatile environment in which we operate. As a consequence, we will propose a dividend of 42 yen per share in fiscal year 2008, 44 yen per share in fiscal year 2009, and 46 yen per share in fiscal year 2010. During fiscal year 2010, we will propose the dividends for fiscal years 2011 and 2012 in order to continue our strategy of providing visibility to our shareholders.

For NISSAN GT 2012, we have identified corporate breakthroughs - forward-thinking proposals with the potential to produce significant results. The five breakthroughs relate to quality leadership, zero-emission leadership, Nissan's business expansion, market expansion and cost leadership.

The first breakthrough is tied to our first commitment, quality leadership.

The second breakthrough relates to our second commitment, which is the roadmap toward zero emissions. I have already outlined our commitment for electric vehicles, and we will continue to work on our environmental action plan, Nissan Green Program 2010. We will introduce clean diesel this fall with the X-TRAIL in Japan and in 2010 with the Maxima in the United States. Nissan's original hybrid technology will debut during fiscal 2010.

Nissan has a track record of innovation, and many new technologies are in the pipeline. In fiscal year 2008, we will launch 10 new technologies, including a new clean diesel engine for lower CO2 emissions, an ultra-low-precious-metal catalyst for lower costs and cleaner emissions, a smart auto headlight for twilight driving, and an intelligent seatbelt with automatic wind-up capability. For the duration of NISSAN GT 2012, we will introduce more than 15 new technologies each year.

The remaining breakthroughs back our commitment to revenue growth.

The third breakthrough - business expansion - relates to the roadmaps for Infiniti, for Light Commercial Vehicles and for an all-new entry car lineup, each supported by a dedicated organization.

Significant growth is planned for Infiniti. We will double our sales volume during NISSAN GT 2012, from 150,000 units to 300,000 units, with top-level profitability. The healthy growth of sales will be supported by leveraging our portfolio expansion with the brand's geographic expansion.

Our Light Commercial Vehicle Business Unit strategy builds upon the significant gains made during NISSAN Value-Up to continue growth. We will double our LCV revenues, which include joint venture and OEM sales and our conversion business. Our LCV business unit will achieve an average operating profit margin above the company's operating margin over the course of the plan.

Our business expansion breakthrough also includes plans for a family of all-new, global entry cars that will enable us to offer affordable models to a larger section of society. Our plans are twofold: First, Nissan cars based on a new A platform and, below, a Nissan version of the Alliance ultra-low-cost car, being developed with Bajaj and planned to be launched in 2011.

Nissan will compete in the entry-car world with a dedicated entry platform that will be used for at least three models built in five Leading Competitive Countries (LCCs), the first of which will be produced in Thailand and India in early 2010. The A-platform models will be easy to source and localize in Leading Competitive Countries, supporting a high level of cost competitiveness while offering an attractive vehicle choice for entry-car customers. Today, Nissan has zero entry-car sales, so there is plenty of room for improvement.

The fourth breakthrough of NISSAN GT 2012 is market expansion.

In India, we have made a strategic decision to work with partners to speed our entry into the market and to leverage local expertise, building on Nissan's proven track record of success with collaborative relationships.

  • With Renault, we are building a 400,000-capacity plant to build passenger cars in Chennai, which is also the site of the Alliance's new technical center.
  • With Ashok Leyland, we have a joint venture to build Light Commercial Vehicles.
  • With Bajaj, we are preparing the Alliance ultra-low-cost car.
  • With Hover, we have a partnership for marketing, sales and dealer development support.
  • And with Maruti-Suzuki we will export A-segment vehicles to Europe.

In India, our volume is expected to increase to more than 200,000 units in fiscal year 2012.

Brazil represents another breakthrough opportunity. Brazil's total industry volume grew 30% in fiscal year 2007 as faster economic growth and an expansion in credit prompted people to buy their first cars, and we expect growth to continue over the next several years. Nissan will increase its market coverage there with the introduction of an entry-level car during NISSAN GT 2012. With our entry in that segment, our volume will increase from 15,000 units today to more than 100,000 units in fiscal year 2012.

In China, Nissan is the only Japanese automaker with a significant Light Commercial Vehicle presence. Among those automakers, Nissan now ranks third in a ranking of passenger vehicles sales, second when sales of Light Commercial Vehicles are added, and first when Dong Feng commercial vehicles are combined. We are accelerating our focus on passenger vehicles in China. Our total volume will increase from 458,000 to more than 800,000 units during NISSAN GT 2012.

In Russia, Nissan's market share was 5.1% in fiscal year 2007, improving nearly one point over the prior year. Our presence will be enhanced by our entry into the Russian Light Commercial Vehicle market. Our passenger-car volume will double, from 141,000 units today to more than 282,000 in fiscal year 2012. Local production of key models will begin in St. Petersburg in 2009. And the recent partnership with automaker AvtoVAZ is expected to open new development opportunities for the Renault-Nissan Alliance in the Russian market.

In the Middle East, volume growth is expected to double, to more than 400,000 units, with a significant increase in market share.

A fundamental necessity to achieving NISSAN GT 2012 is cost leadership, which is our fifth breakthrough.

Over the past three fiscal years, the increasing prices of energy and raw materials such as steel, aluminum and precious metals have resulted in a negative impact of nearly 300 billion yen on Nissan's financial performance, and we anticipate that more increases are likely to occur. Since our industry has difficulty passing raw material price increases to consumers, additional cost-reduction efforts are needed to offset them.

We will continue to work with our suppliers on 3-3-3 activities and productivity improvements to maintain a level of purchasing cost reductions in line with the highest rates we have achieved in the past.

We will double the volume per part, on average, over the next five years as a result of the volume increases from business expansions, reductions in part complexity and product diversity, and an increase in Alliance component parts.

We will pursue deep, competitive localization in Leading Competitive Countries, simplifying design specifications to enable efficient sourcing. We aim for more than 90% localization of parts for new vehicles built in LCC markets. An important milestone will be the launch of our new A-platform vehicle in 2010: We expect its cost to be 30% lower than that of our current March compact car.

We will challenge all aspects of material costs. For example, in fiscal year 2007 we spent more than 100 billion yen on the purchase of precious metals. We will cut the use of precious metals by 50% per car, on average, on new models launching in fiscal years 2009 and 2010.

General and Administrative (G&A) costs will be kept flat until fiscal year 2010. Our objective is to maintain a 4% ratio of G&A to revenue on a long-term basis.

We are stepping up the way we manage our costs by looking at monozukuri as a whole, rather than function by function - managing all expenses, from purchasing to manufacturing to logistics to G&A - in order to improve Nissan's overall competitiveness.

Our ability to compete will also be supported by the expanding Renault-Nissan Alliance, which now includes the 900,000 vehicles from AvtoVAZ. When the Alliance was first established, Nissan and Renault mainly cooperated by sharing platforms and powertrains. In 2001, we began optimizing our sourcing through the Renault-Nissan Purchasing Organization, which now represents 90% of Nissan and Renault global annual purchasing turnover and 100% of parts purchases.

The Alliance is a unique source of permanent benchmarking for every function. By systematically comparing all our processes, each partner can identify progress opportunities and rapidly transform them into concrete projects.

As our partnership has matured, so has our ability to become more proactive and strategic. The evidence is seen through several recent decisions:

  • in India, where we are preparing the Alliance ultra-low-cost car and where we are building a common plant in Chennai;
  • in Morocco, where our new manufacturing complex will also have an operating capacity of 400,000 units;
  • in Russia, where we are exploring opportunities with AvtoVAZ; and
  • in our zero emissions strategy, where we will take first steps in mass-marketing electric vehicles together.


The Alliance is the strategic partnership that was a catalyst in Nissan's past turn-around, and it continues to be the framework for the sustainable development of Nissan's future. Since 1999, Nissan has delivered a lot of results in the Alliance, and we know that Nissan has much more potential yet to realize as a global automaker and as a partner in the Alliance.

With NISSAN GT 2012 before us, our motivating themes are growth and trust. Growth through new products, new technologies, new markets. And trust by boosting confidence in our products and services, in our performance, in our return to shareholders and in our role on this planet. With this plan, we are making long-term commitments about things we believe in - commitments about sustainability, about mobility for all and about the environment.

At Nissan, today and going forward, everything we do is dedicated to enriching people's lives.

# # #