June 25, 2008


Annual General Shareholders’ Meeting
June 25, 2008 (30 minutes)
Remarks by Carlos Ghosn, President & CEO, Nissan Motor Co., Ltd.

We always appreciate the opportunity to interact with our shareholders. Your support is critical to the success of our efforts, and we welcome your participation in this meeting and the confidence you place in our company with your investments in these challenging times.

It is also encouraging to see how the number of retail shareholders is steadily increasing. Since 2000, the number has doubled, to 250,000 shareholders today. Thank you for your ongoing support.

Today I want to share with you specifics about our plans for building both growth and trust over the next five years as we begin to implement our new business plan, NISSAN GT 2012. As we work to create sustainable value, we want to be a trusted company for our customers, a better employer, a responsible corporate citizen and a reliable, long-term investment for our shareholders.

FY 2007 sales and financial performance
First, allow me to summarize last year’s results.

In fiscal year 2007, the global auto industry faced many serious challenges in one of the toughest environments I have witnessed since I joined our industry, but Nissan was able to make gains on several fronts.

Our global sales increased to 3.77 million units, up more than 8% over the previous year. We realized market share gains in our main markets – in Japan, in the United Stated and in Europe – and our sales in General Overseas Markets passed the one-million mark for the first time. We have proven that Nissan can grow even when our two main markets – Japan and the U.S. – are in significant decline.

In fiscal year 2007, we released 11 all-new models globally, including outstanding models such as the Rogue crossover, the Infiniti G37 Coupe and the GT-R supercar, the ultimate expression of Nissan’s passion for performance. 2007 was the year of the GT-R, and national and international media reflected the excitement of sports car enthusiasts around the world.

Last year, we launched 10 important new technologies, reclaiming our reputation as “Nissan of Technology.” Let me highlight four of them:

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

Our consolidated financial performance for fiscal 2007 shows that Nissan’s profit increased and that the company is in very good financial health.

Nissan’s net revenues were 10 trillion 824 billion yen, up 11.6% versus the prior year.

Operating profit was 790.8 billion yen, up 4.7%. The increase in operating profit is due to the effect of significant volume growth and ongoing cost reduction.

Our operating profit margin came to 7.3%.

Net income reached 482.3 billion yen, up 7.4%.

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. According to a recent Nikkei article, Nissan’s free cash flow ranked in fourth place among companies listed on the Tokyo Stock Exchange and was in first place in the auto sector.

For non-consolidated figures, please refer to the business report that you have received.

Today we are proposing a 20-yen-per-share year-end dividend, giving a full-year dividend of 40 yen per share for fiscal 2007, as initially planned.

Fiscal year 2008 outlook
In our outlook for fiscal year 2008, we forecast sales to reach 3.9 million units, a 3.5% increase over 2007. Growth will come from General Overseas Markets and Eastern Europe, including Russia.

During fiscal year 2008, we will launch nine all-new models globally. This month alone we launched:

  • Teana in Russia, Japan and China;
  • Infiniti FX in the United States; and
  • Maxima in the United States.

Other new models to come include:

  • 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.

In fiscal year 2008, the global auto industry will face severe headwinds, worse than 2007. The escalating costs of raw materials and energy, the weakening U.S., European and Japanese economies, unfavorable foreign exchange rates – all of these will continue to affect our industry.

Considering this environment, we filed our forecast for fiscal year 2008 with the Tokyo Stock Exchange on May 13. Net revenue is expected to be 10 trillion 350 billion yen, consolidated operating profit is expected to be 550 billion yen and net income is forecast at 340 billion yen.

Nissan’s challenge is to understand its operating environment and develop a plan that will allow it to prevail over the long term. Our plan for the next five years is NISSAN GT 2012. As the plan’s name indicates, it reflects our emphasis on growth and trust.

The length of this plan – five years instead of three – is different from previous plans, and so is its purpose. Now that our company is robust and healthy, we can take a longer view. We want to align our growth plans with our desires to contribute to the sustainable development of mobility.

Let me describe the three corporate commitments of NISSAN GT 2012.

The first commitment is about quality, which is essential for a world-class automaker and the integrity of its brands. We are aiming for quality leadership for our products, our services, our brand, our management and our company overall.

2007 was a good year for Nissan’s quality efforts. We received 50 top product awards in 25 countries and 25 sales and service awards in 31 countries around the world.

Within the past few weeks, our Infiniti brand was ranked number two among all U.S. brands in the latest J.D. Power Initial Quality Survey, moving up seven spots from the prior year. Good quality also, without a doubt, was also behind Consumer Reports’ ranking of the Infiniti G35 Sedan as the 2008 “Top Upscale Sedan,” a distinction the G35 earned for the second year in a row.

You should also be aware that the same J.D. Power survey awarded the Tochigi plant second place in the 2008 Assembly Plant Quality Awards for the Asia/Pacific Region. Tochigi builds a variety of sports and luxury models, such as the Fuga, Skyline, GT-R, Fairlady Z and a number of Infiniti models. We are very proud of the efforts of all the Tochigi employees, who were recognized for their outstanding contributions to Nissan quality.

These kinds of accolades demonstrate the kind of quality leadership we are aiming to achieve on a consistent basis to build trust among our customers. Quality is our priority, so quality leadership is our number-one commitment in NISSAN GT 2012.

The plan’s second commitment is for Nissan, along with Renault, to become a global leader in zero-emission vehicles.

Why are we focusing efforts and resources in this area? Because we see the reality of how our world is changing, and we plan to offer a breakthrough technology that is well suited to be an important near-term solution.

Let me explain our direction.

This chart shows how the number of vehicles sold globally has grown since 1990, from 46 million to 69 million vehicles worldwide. Now imagine how this growth will continue.

If you look at the ratio of the number of vehicles to the number of inhabitants in various countries around the world, you see a contrast between the world’s mature markets and the rapidly growing emerging markets. Today, two of the highest-populated countries in the world – India and China – have fewer than 50 vehicles per 1,000 persons.

Now let’s look ahead. Over the next five years, experts predict that most of the growth in the global car market will come from India, China, Russia, Brazil, the Middle East and other emerging markets.

This growth will mean more cars on more roadways in more countries. At the same time, people everywhere will continue to be concerned about the availability and price of oil and the impact of CO2 emissions. On one hand you have a demand for more cars. On the other is the demand for a cleaner planet.

What is the best way to address both?

We believe the best solution is zero-emission vehicles, which are independent from oil and good for the environment.

When I say “zero-emission” vehicles, I am referring to electric vehicles and fuel cell vehicles, cars that do not burn oil and release zero emissions into the air. Fuel cell vehicles are promising for the future – and Nissan continues to invest in their development – but the production and distribution of hydrogen is yet much more problematic than electricity or batteries. Because the battery technology is more advanced, we will introduce electric vehicles first.

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 agreements to mass-market electric vehicles in Israel and Denmark in 2011, and we are currently negotiating with other countries in Europe and Asia.

Some people have the impression that electric cars are or will be boring and ugly, but we want to prove the contrary. We will not bring only one product; we will offer a range of high-quality products that are reliable, well engineered, attractive and fun to drive.

Without the battery, the cost of the electric car should be comparable to that of a similar-sized car today. The lease of the battery plus the electricity cost should be lower than the cost of gasoline. If oil prices continue to stay at a high level, as expected, the electric car will become that much more attractive.

We will continue to develop a portfolio of green technologies to reduce CO2 emissions, including improvements to gasoline engines, clean diesel, hybrids, flex fuels and fuel cell vehicles. In September, we will introduce the X-TRAIL with clean diesel in Japan. In 2010 we will launch the clean-diesel Maxima in the United States and our own original hybrid technology.

People today are very interested in cars that are good for the environment, and we believe there is strong latent demand for electric cars. Nissan has an opportunity to be a world leader in mass-marketing them. We believe zero-emission vehicles will be good for our planet, for our customers and for reinforcing confidence in Nissan’s vision and capabilities.

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

We have four main drivers to support our revenue growth, namely:

  • New products;
  • New technologies;
  • Market expansion; and
  • Business expansion.

New products
During NISSAN GT 2012, we 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.

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 of the world, in nearly every segment.

New technologies
Again, new models will be introduced with many new technologies.

Beginning in this fiscal year, 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.

We have been making consistent investments to boost our R&D capabilities over the past eight years. Some were geared toward enhancing our technical centers and systems. Some were focused on developing expertise. All these investments are enabling our engineers to put their technical abilities to work on projects they feel passionate about, and the fruits of their hard work will be revealed year after year. Our technology pipeline is filled with advances that will be good for the environment, enhance safety, improve dynamic performance or provide greater life-on-board satisfaction.

Market expansion
Another revenue-boosting driver will be market expansion. Earlier I mentioned that future growth will come from emerging markets. This is why our focus is on these rapidly growing and increasingly important areas.

  • In India, we are working with strategic partners to speed our entry into the market. With Renault, we broke ground this month for a new passenger-vehicle plant in Chennai. With Ashok Leyland, we have a joint venture for building Light Commercial Vehicles. We will partner with Bajaj to produce an ultra-low-cost car. And we will work with Hover on marketing, sales and dealer development support. Our volume is expected to increase to more than 200,000 units in fiscal year 2012.
  • In Brazil, we will increase our market coverage by introducing an entry-level car that will appeal to cost-conscious new car buyers. Our volume will increase to more than 100,000 units.
  • In China – where Nissan is the only Japanese automaker with a significant Light Commercial Vehicle presence – we will accelerate our growth with a focus on passenger vehicles. Our volumes will nearly double by 2012.
  • In Russia, we will enter the Light Commercial Vehicle market, and our passenger-car volume will double over the course of the plan. We will begin local production of key models at our new St. Petersburg plant in 2009. And the recent partnership with automaker AvtoVAZ is expected to open new development opportunities for the Renault-Nissan Alliance in Russia and surrounding countries.
  • In the Middle East, volume growth is also expected to double, with a significant increase in market share.

Traditional markets, such as Japan, the United States and Europe, are still extremely important, but we intend to take full advantage of the rapid growth in emerging markets. Sales from the five areas I just mentioned are expected to boost our sales by 1 million units during NISSAN GT 2012. By fiscal year 2012, BRICs will account for more than a quarter of Nissan’s global sales.

Business expansion
Finally, another contributor to revenue growth will be business expansion. By that, I mean our roadmaps for Infiniti, for Light Commercial Vehicles and for an all-new entry car lineup.

For Infiniti, we will double our sales volume during NISSAN GT 2012, with top-level profitability, expanding both our portfolio and Infiniti’s global presence. By fiscal year 2012, Infiniti will have a presence in 95% of the world’s luxury markets. Infiniti is being evolving from being primarily a U.S. brand to a global brand, with expansions into Korea, Russia, China, Ukraine and, from October 2008, Western Europe.

Significant growth is also planned for our Light Commercial Vehicle (LCV) business. Examples of our LCV lineup include: passenger buses, such as the Civilian; versatile light-duty trucks, such as the Atlas; medium vans, such as the Caravan; micro vans like the Clipper; and pickup trucks such as the NP300. The lineup also encompasses a variety of conversion, or special purpose, vehicles, such as ambulances, dump trucks or vans with wheelchair lifts.

In fiscal year 2007, Nissan sold LCVs in 73% of the world’s markets, and our LCV footprint will continue to expand. By the end of NISSAN GT 2012, we expect to offer a range of LCVs in almost every market around the world, serving both global and local customers. We will enhance Nissan’s LCV strength in existing territories such as Japan, Europe, China and Mexico, and we will enter new, key territories such as the United States, India, and Russia. In certain markets, such as China and Mexico, Nissan is already the LCV market leader.

We will expand our product lineup and double our revenues. Our LCV business unit will achieve an average operating profit margin above the company’s operating profit margin over the course of the plan.

Our all-new, global entry car lineup will enable us to offer affordable models to a larger section of society. Our plans are twofold: First, we will have at least three new entry-car models, the first of which will be built in early 2010. We will also introduce the Alliance ultra-low-cost car, which is being developed with Bajaj and planned to be launched in 2011. Today, Nissan has zero entry-car sales, so there is plenty of room for improvement.

So you can see that future growth will come from new markets that will be very different from what we know today and from new products that will be different from what we know today. A lot of the cars that will be needed three to five years down the road, such as electric vehicles and the ultra-low-cost car, do not even exist today. Nissan is preparing to compete in the future by making forward-thinking investments and taking forward-thinking actions today.

Our ability to compete will also be supported by the Renault-Nissan Alliance. When the Alliance was first established, Nissan and Renault mainly cooperated by sharing best practices and developing synergies. As our partnership has matured, we have begun to move beyond simply sharing data to achieving operational objectives at a higher level, developing common plants and sharing development. You can see the evidence 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 that will be capable of producing 400,000 vehicles a year;
  • 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 story is not finished. From the beginning, we aimed to create value, and we have done this. In fact, an independent study of partnerships, mergers and alliances in our industry shows that the Renault-Nissan Alliance is the only one that has worked so far. All others have destroyed value.

We have more potential yet to deliver. Today, with addition of AvtoVAZ, the Renault-Nissan Alliance has a global scale of more than 7 million units, which positions us as the fourth-largest group in the global auto industry. Given our growth forecast for this year and next, our volume may put us among the top three before the end of 2010.

Shareholder return
We are confident about NISSAN GT 2012 and our ability to perform, even though we remain prudent about the challenging environment in which we operate. In addition to the three key commitments I have described today, we also have internal guidelines to keep our performance and profitability on track. Our key indicators will be global sales volume, operating profit margin and free cash flow, which covers the wide range of all our business’s financial components and provides a clear measure of Nissan’s value creation potential and financial health.

As with our prior plans, we want to provide visibility of our share through a transparent, multi-year dividend policy. We plan to 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 announce the dividend policy for fiscal years 2011 and 2012.

I began by talking about our desires to build both growth and trust.

Growth will be supported by our complete and diversified lineup, which is represented by some of the products that are on display outside this hall. Growth will also be supported by our innovations – from the technologies we put in our cars to progressive solutions for transportation itself, such as electric vehicles and the Alliance ultra-low-cost car. And growth will come from expansions of our business and developments in new markets around the world.

But what about trust?

Solid financial performance, efforts to sustain our environment and outstanding quality and safety will build trust. So will our contributions to society. A company is a collection of people, after all, and Nissan has a long history of helping people in all the places where it does business.

We prepared a display of many of the areas where we have been engaged in projects to support education, enhance the environment or offer humanitarian support in times of natural disasters. Let me tell you about some of the things we have done recently:

  • In Japan, school children are exploring the world of auto making in their own classrooms, thanks to Nissan’s educational Monozukuri Caravan.
  • In South Africa, Nissan is providing mobile clinics that offer eye care to thousands of children in remote farming districts throughout the country.
  • In the United States, we have a partnership with Habitat For Humanity to build – with help from our employee volunteers – affordable, eco-friendly homes for worthy families.
  • And Nissan made donations to emergency relief efforts following recent earthquakes in Japan, the massive earthquake in Sichuan, China, and the aftermath of Cyclone Nargis in Myanmar.

These efforts and our broader work in the area of corporate social responsibility are included in our latest Sustainability Report, which we publish each year to coincide with this meeting.

We are also investing in people’s lives by creating better working conditions for our employees. Some of the investments are in our employees themselves, such as our efforts to support diversity or to boost learning opportunities. Some of the investments are made in physical facilities, enhancing our infrastructure or creating brand-new workplaces around the globe.

Today you can see the model of our new global headquarters in Yokohama, which is now under construction. Our new facility will be designed to meet the high standards of CASBEE [Comprehensive Assessment System for Building Environmental Efficiency], an environmental ranking standard. We are taking great care to construct an environmentally friendly building, with many innovations that will conserve energy, recycle resources and protect our natural surroundings. Next year, we will look forward to welcoming you to our new home, which will be at the heart of Nissan’s global value-creation efforts.

As Nissan shareholders, you are our partners in all these efforts. Thank you for your valuable support, which promotes a sustainable future and helps to enrich people’s lives. We want to continue to build a company you can be proud of.