June 27, 2011
Nissan Midterm Plan Announcement
Carlos Ghosn, President & CEO, Nissan Motor Co., Ltd.
The midterm plan that I will introduce to you today is demanding.
Some may question whether we can achieve all of it. But I stand committed - as I did in 1999, in 2008 and in March 2011 when the earthquake decimated some of our prized facilities - that we can deliver all the results. Nissan has the foundation, the resources, the strength and the will to achieve its challenging objectives.
This plan builds upon all the lessons learned, synergies developed and investments made since 1999. Then, Nissan was a company lacking a shared vision and plagued by a lack of focus on the crucial needs of its stakeholders. Today, Nissan has a clear and global vision, an established presence in all major markets and segments, and is recognized as a potential leader in innovative technologies, products and services.
This new midterm plan is a wide-ranging plan for fiscal years 2011 to 2016 that accelerates Nissan's growth. And while it is our vision of the future of Nissan, it is also a revitalization of our staunch commitment to consumers.
Meaning of Nissan Power 88
The name of our new midterm plan, Nissan Power 88, underscores our engagement to achieve our corporate goals.
"Power" derives its significance from the strengths and efforts we will apply to our brands and sales. Our commitment is to renew our focus on the overall customer experience, elevating Nissan's brand power and ensuring quality excellence for every person who buys a Nissan car.
"88" denotes the measurable rewards from achieving our plan. We aim to achieve a global market share of 8% from 5.8% in 2010. And we will increase our corporate operating profit to a sustainable 8% from 6.1% in 2010.
As a six-year plan, Nissan Power 88 allows the benefit of long-term strategic planning and continuity in operational decisions. The plan's mid-point allows us to define measurable and precise priorities for the next three years, as we chart our progress.
The key contents of our plan focus on developing leadership and profitability in growth markets worldwide, and actively cultivating sustainable mobility, through electric cars and technologies that reduce emissions, and mobility for all. Nissan will provide an attractive, competitive choice in its product lineup to every person, anywhere, who wants a car.
In the auto industry, any plan begins with products, and Nissan's extensive product plan will deliver one new vehicle every six weeks, on average, during the next six years. We are broadening our range of models for both Nissan and Infiniti brands and eliminating product overlaps. More dedicated vehicles for key growth markets, such as China, Brazil, Russia, India and Indonesia, will allow personal mobility to become more accessible to those consumers who want it.
Nissan's global product lineup is already wide and deep. During Nissan Power 88, we will launch a total of 51 new models.
In 1999, Nissan had 49 vehicles in its global product range, covering 77% of markets and segments. Today we have 64 vehicles covering 80% of markets and segments. By 2016, Nissan will have 66 Nissan and Infiniti vehicles in its global portfolio, covering 92% of segments and markets worldwide. We will consolidate some models and add others, eliminating 13 and adding 15 new models. For example, Quest and Elgrand will be consolidated into one model.
Our plan will also include the development of more than 90 new advanced technologies, averaging 15 per year.
We will deliver a complete renewal of our popular global growth models. Driving volume in key segments worldwide, these models include Altima, Teana, and QASHQAI, which just reached its one-millionth production mark at our Sunderland plant in the United Kingdom. The all-new Tiida hatchback, unveiled at the Shanghai Motor Show in April, was the first model of this renewal.
We will widen our portfolio of Infiniti products to achieve a 10% global market share among luxury products in 2016, a level that would represent, in today's TIV, 500,000 sales. We will expand our product lineup of seven vehicles in 36 markets today to more than 10 vehicles in 71 markets in 2016. This expansion will include the Infiniti JX crossover in the spring of 2012 and a dedicated electric vehicle by 2014.
We will address specific needs of Chinese customers by offering a broader range of Nissan and Infiniti vehicles, including long-wheelbase derivatives. We are firm in our resolve to reach 10% market share in China. We are also working with our Chinese partner, Dong Feng, to co-develop a range of models for the local-market Venucia brand.
Our versatile V-platform was designed to deliver stylish, high-quality, affordable vehicles to the global marketplace. We will expand our V-platform range of global products by one model, for a total of three, that will help us to reach more than 1 million units in 2016, from 130,000 units today. We will continue to use a highly localized supply base, a minimum of 90%, in Thailand, China, India and Mexico, where the cars are made.
We are focusing more attention on the price-entry segment to serve a growing number of customers in the emerging markets, such as the BRICs and Indonesia. Our lineup will be developed through cooperation with our partners.
Nissan's longstanding presence in the commercial vehicle segment is also gaining momentum. A Nissan LCV will soon be synonymous with the iconic "yellow cab" of New York City, since it was chosen in competition to be the "Taxi of Tomorrow." By fiscal 2016, Nissan will be the world's leading light commercial vehicle manufacturer.
Nissan Power 88 identifies six strategies as levers we will use to achieve results according to plan. The six strategies are:
- Strengthening our brand power;
- Enhancing our sales power;
- Enhancing quality;
- Optimizing Nissan's zero-emission leadership;
- Accelerating our growth through business expansion; and
- Reducing our costs.
Pillar 1: Brand power
To strengthen Nissan's brand power, we will expand our strengths in engineering and production to the sales, marketing and ownership experience. And we will raise the level of interaction with our customers to create a world-class standard of service that will help us build lasting relationships with every Nissan car owner.
We recognize that having a stronger brand will help close gaps with our top competitors in every measurable area, from revenue generation to overall opinion and purchase intention.
To build more consistent, clear brand identities for Nissan and Infiniti, we will fully integrate our global marketing and communications, creating a unified approach led by a global management team.
We will also use large-scale brand platforms, such as Infiniti's investment in Formula One and Nissan's zero-emission strategy, to elevate our brands' global awareness and reputation.
Nissan's brand power has already been enhanced by the technological strength, innovation leadership and commitment to the environment showcased in Nissan LEAF, which has been recognized as the "2011 World Car of the Year" and "European Car of the Year 2011."
Nissan LEAF has created a critical brand advantage that we aim to replicate with other Nissan models. As the car of choice for early adopters and thought leaders, the LEAF brand goes beyond the car to inject technological savvy and forward-thinking into every car that Nissan sells.
Pillar 2: Sales power
Sales power in the midterm plan refers to fully grasping the needs of customers in each market and drastically raising sales volume and market share.
Nissan currently has 6,000 major points of sales globally. We will expand our retail network to 7,500 outlets in the midterm plan period.
In emerging markets, we will focus on building a robust dealer network, with market positioning and staffing optimized to meet the needs of local Nissan customers.
In mature markets, where our dealer network coverage is established, we will take a strategic approach to improve customer loyalty as well to improve sales efficiency by increasing the sales volume per outlet.
Nissan is now the leading Japanese brand in China, Russia and Mexico and is on track to become the largest volume Asian brand in Europe by fiscal 2016. We are also focusing our efforts to boost sales power in Japan, in the United States, as well as in the ASEAN region.
Pillar 3: Enhancing quality
Nissan aims to make steady progress in improving product quality. During Nissan Power 88, our aim is to raise Nissan into the top group of global automakers in product quality and to elevate Infiniti to leadership status among peer brands by fiscal 2016.
Pillar 4: Zero-emission leadership
No other global automaker is as engaged in comprehensive activities to advance the entire system needed to make sustainable mobility a reality. Nissan is taking a leadership role in every aspect, from the development of batteries, chargers and a vehicle lineup to electric grid studies, battery recycling and the use of batteries for energy storage.
Electric cars demonstrate that what is good for the public and what is good for the planet is also good business. Nissan's commitment to sustainable transportation is a solution to concerns over climate change and an important business decision as consumers continue to demand cleaner cars. Movement toward greater use of renewable energy - such as solar, wind and hydropower - is directly related to EVs because electric cars are not restricted to any single source of energy.
This year, Nissan will take the lead as the all-time volume leader in dedicated electric vehicle sales. The Alliance is bringing seven more all-electric models to follow the successful launch of Nissan LEAF. Nissan's EV lineup will include a light commercial vehicle and an all-electric premium car, to be launched by Infiniti in 2014. Together with our Alliance partner Renault, we intend to put 1.5 million EVs on roads worldwide by 2016.
Our emphasis on sustainable mobility also encompasses our range of technologies that support PURE DRIVE. For example, our proprietary hybrid technology will be tailored to future Nissan and Infiniti models, and our next generation Xtronic CVT will increase fuel efficiency in future Nissan vehicles and maintain our status as the global leader in CVT technology.
Pillar 5: Business expansion
The fifth pillar of our plan relates to our strategies for business expansion.
In 1999, Nissan's global market share was 4.6%. In 2010, Nissan achieved a record 5.8%. For FY2016, we are targeting 8%.
We will achieve this supported by a steady tempo of a new product launch every six weeks, a continued focus on growth markets and the expansion of our Infiniti and light commercial vehicle businesses.
We will also concentrate on increasing our presence in Brazil, India and Russia, as well as in the next wave of emerging markets, including the ASEAN 5 - Indonesia, Thailand, Malaysia, Philippines and Vietnam. Before the crisis, emerging markets accounted for 40% of world TIV. By FY16, they will represent 60% of global sales.
Manufacturing investments will support volume increases, especially in China, North America and Brazil.
Nissan is the top Japanese car maker in China with a 6.2% market share, and China will continue to be Nissan's largest single global market into the plan. By early 2012, we will have nearly doubled our production capacity, to 1.2 million units, and we will further increase our capacity to be in line with our goal of 10% market share. With our partner Dong Feng, we will continue to invest in more products and dealers and build our new local brand, Venucia.
In North America, we will invest to expand our manufacturing capacity and retain our number-one position in Mexico, where Nissan leads the market with a 23.1% share.
In Brazil, where we have 1.2% market share, we target a minimum of 5% market share. And we will build a new plant in Brazil, with a capacity of 200,000 units as a first step.
In Europe, Nissan will become the largest volume Asian brand. In Russia, we aim to increase Nissan's market share to 7% by 2016.
In India, we will add five new models to be built in the new Alliance plant in Chennai and continue to expand our dealer network.
In ASEAN, Nissan Motor Thailand now serves as a strategic industrial base and export hub, and we are concentrating on growth in Indonesia. We are also increasing the annual production capacity of our plant near Jakarta from 50,000 to 100,000 units to meet local demand. We aim to increase our share in ASEAN 5 from 6% today to 15% by 2016.
Nissan is the only global automaker with a mass-market, zero-emission lineup, a rapidly growing presence in key emerging markets, and a unique ability to work with strategic partnerships. These are competitive advantages that will define the leaders of our industry in the 21st century.
Pillar 6: Cost leadership
Growth in any market is not possible without a high level of cost competitiveness, so the sixth pillar of our plan is cost leadership.
Since we implemented the Nissan Revival Plan, we have been successful in reducing costs by 5% annually, due mainly to our cross-functional monozukuri activities involving our supplier base. As our production footprint is increasingly global, we will maintain this pace by enhancing and deepening these activities in every Nissan production base across the regions, particularly in North America, China, India and Russia.
By increasing the use of carry-over/carry-across parts and systems, we will further boost overall platform efficiency. Platform and product synergies will be developed with all our partners, especially in small and medium vehicle segments.
And with the additional growth in volume, we expect to realize greater cost efficiency. Evaluating not only purchased parts but also logistics and in-house costs, we have set an objective to reduce the total cost by 5% each year.
In Japan, we will raise our yen revenue through increased vehicle sales and also reduce our yen-based costs through greater localization of parts supply to overseas plants.
Enhancing our monozukuri activities in Japan and across the regions is key to our cost reduction efforts. Through these activities we will maintain our commitment to produce 1 million vehicles per year in Japan.
Nissan's performance will be enhanced by leveraging 12 years of successful collaboration within the Renault-Nissan Alliance and its five established and productive partnerships.
For example, through the Alliance's strategic cooperation with Daimler, Nissan will benefit from diesel engine and power train technologies, including a supply of Mercedes-Benz engines for Infiniti vehicles.
With AvtoVAZ, the Alliance will take 40% market share in the Russian market, with investments in products and localized manufacturing and sourcing.
Our partnership with Dong Feng is critical to our reaching 10% market share in China, and we are preparing to announce a dedicated midterm plan for China, with Dong Feng, in July.
With Ashok-Leyland in India, Nissan has a partner in the development and manufacture of light commercial vehicles.
And with Mitsubishi, we expanded the scope of our cooperation to develop a new mini car joint venture.
As part of our shareholder return policy, Nissan will continue to increase the dividend per share over the course of the midterm plan. For fiscal year 2011, Nissan projects an increase in the dividend to 20 yen per share, up from 10 yen per share in fiscal 2010. Beyond fiscal 2011 and over the midterm plan, our dividend policy will target a minimum payout ratio of 25% of net income.
Nissan Power 88 is our guide for the next six years, and we expect to have a good start in fiscal year 2011.
We are forecasting global sales of 4.6 million units, a 9.9% increase, and net revenues of 9.4 trillion yen, up 7.1%. Fiscal 2011 should be a good year after a very rough start.
Going forward, the success of this midterm plan will rely on the men and women of Nissan worldwide, and I am confident that we will deliver the results we plan. My confidence is bolstered by the strong performance demonstrated during the recovery from the global financial crisis and, most recently, from the impacts of the natural disasters that occurred in March in Japan.
We will enhance Nissan's brand power, sales power and the quality of our products and services to bring innovation and excitement to our customers and reinforce our employees' pride.
We will continue to lead the way in advancing sustainable mobility and mobility for all, bringing innovative, exciting, cleaner and more affordable cars to more people everywhere in the world.
This is what Nissan Power 88 is about, and we are eager to start and to deliver.
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