September 26, 2011

CPO Colin Dodge says Nissan's only problem is making enough cars

Nissan Chief Performance Officer (CPO) and Executive Vice President (EVP) Colin Dodge spoke with the Global Media Center on global sales, car production, Mexico and the BRIC markets.

Q1. Colin, among your many hats, you are also Nissan's Chief Performance Officer. Taking a global view now of Nissan operations and considering the events since March, where does Nissan stand right now?

CPO:

At the end of August, we're 150,000 (cars) up on last year. However, we're still 3.7% below business plan (BP), so my understanding of the situation is we've got 80 (thousand) still to recover to get back to the original BP. I think everybody is on track to do that. So, six months after the tragedy that occurred in March, we're producing now the BP plus about 5%. And at the moment, it won't be exactly by model or by country, because life's not as simple as that, but we're making a recovery plan to get back to the original BP, and we have 80,000 to go.

In terms of the regions affected, we're 50 (thousand) down in the United States, 10 (thousand) in Europe, and 20 (thousand) in Japan. We're up in China against BP, but we've got 80,000 to catch back. So, if you're a manufacturing guy, you're making more cars now than we planned to, and in the market itself, my observation is we've recovered from the earthquake as a company, it seems like, about two months quicker than Toyota, and Honda is still not recovered.

I think a combination of the business continuity activities that EVP [Mitsuhiko] Yamashita and EVP [Hiroto] Saikawa took care of, and the action of the quake recovery committee, which was done under the chairmanship of COO [Toshiyuki] Shiga and 100 people in this building the day after the earthquake, seems to be best one. So, we're in pretty good condition relatively, but until we're back to BP, I personally won't be satisfied. I am forecasting intuitively, but unless there is a massive change in consumer sentiment in the next six to eight weeks, we'll get back to BP. We're doing pretty good and relatively very, very well, but for me "good" means "better than business plan", so until then I'll say we're doing "relatively well".

Q2. Certainly, there are some headwinds out there. Mr. Ghosn has been talking about the yen's strength for Japanese-based production, and in Europe there are some concerns about whether there will be contagion from the debt issues there. It's hard to put a number on it, but could these be factors or is Nissan insulated?

CPO:

At the moment, you've only got one problem - making enough cars. We've got to stop watching CNN or reading the Internet about what may happen in three or four months time. I've got back orders for 30,000 cars in Mexico, 20,000 in Latin America. In Europe, even though they're working seven days a week with shifts, I've got orders going back for two months on Qashqai. Versa, which we've just launched in Mexico, is unbelievable - we've got 26.4% share in Mexico now.

The products that we have coming through and the consumer behavior, and what you see on CNN - there seems to be no relationship at the moment. I don't know if that's just Nissan, but I said to my people, "Will you stop watching CNN and get to the factories, make me more cars, and stop worrying." I've got one problem today - making enough cars to satisfy our customer orders.

The yen, of course, is unfortunate. However, we're doing our best to mitigate the effects of the yen. We're praying for the Japanese government to do something in terms of quantitative easing. If not, it's looking pretty dark, obviously, but I wouldn't be depressed for the next six to eight weeks. Let's make some cars, and sell the cars in the system.

Q3. You just visited Mexico to celebrate Nissan's 50-year anniversary there, and Nissan is holding top market share. Do you see Mexico not as only a market doing very well but a template for what Nissan wants to achieve elsewhere?

CPO:

Mexico's performance at 26.4% is a bit unbelievable for many other countries. When the market was closed, we were there. We dominated the market, and the competition wasn't that fierce. We established a good brand and a loyal customer base, and now we're milking it. That was 50 years worth of investment to go to a new country.

I've been in manufacturing all my life, and I will particularly note the chassis-building in our plant in Mexico. I was extremely impressed - it's one of the best plants in the world, and they're very flexible. They're responding to customers, got the right products, and Mexico is a benchmark on many aspects of the business. Can you catch up on 50 years worth of customer base quickly? I doubt it, but it is somewhere everyone should go visit, because we are definitely No.1 by a big margin.

Q4. Looking at three of the four BRIC nations - Brazil, Russia and India, they come under your hats, while China is where you have a lot of experience. Nissan is pledged for expansion during the Power 88 plan. Starting with Russia, can you walk us through the markets?

CPO:

In Russia we still have a small manufacturing activity and we make big cars locally, and the other manufacturers make the small cars in high volume locally and bring in their big cars from outside. AvtoVAZ is working from a profit point of view and a brand point of view, and is very good. We need in Russia just one thing - small car manufacturing capacity, which we're developing with Renault and VAZ.

It's quite a tricky country, and it's best to be with someone who knows Russia well, which VAZ does, and Renault does - they've been there a long time. So in Russia, we're pretty confident already that we could do 8% market share without any particular magical sort of effort. I think Nissan's brand is so strong - they like Nissan's quality and our products. The new Juke that we've just launched is on fire in Russia. I don't think 10% market share is beyond our ability in Power 88, since we've got local production, and if we "ruble-ize" the parts, we'll be fine.

In India, we've just started. I think we've made a very strong plant. We've broken lots of records in terms of production ramp up. Localization content, I think, is 92 or 93% already. We're localizing all the powertrains, including the "Five Cs", which we didn't do immediately in some countries, so I think India is on for a substantial presence.

In Brazil, we've just started. At the moment we make some cars in the Renault plant, but it's clear if we want to be a big part of Brazil, we need the capacity and we need local content, about 90%. That's all you have to do in a BRIC nation. If you look at all the companies that did well in BRICs, they had high local content, local manufacturing, local management well connected to the sales company, and the product planning.

We're very like this in China, and we're following exactly the same template in India, Russia and Brazil. I think we'll do well.

Q5. Finally, looking at the breadth of Power 88 , you have spoken about capacity right now. Is there any other facet of the plan that will be key in seeing the 8% levels achieved?

CPO:

Yes, product is still the most important thing in our industry. You get that right and life's OK. You get that wrong and it's very hard work. I've seen the product plan, I've seen the cars - they're better than the last generation and not all carmakers are getting better from generation to generation, and there's some deterioration in some competition's product, which is encouraging.

Local content is still the key issue because you isolate yourself from currency-exchange rate. As soon as you do that, you just need good cars at the right cost, and you don't have to worry about the Brazilian currency to the whatever currency.

The team we have at the moment right across the world is the best team since I've been in Nissan. It seems very joined up, it seems to be doing the right things, and at long last trying to improve our brand and sales power, which is basically something we've had deficiencies in. So we're kind of doing all the right things, and if we can get the customer experience to be something that is a pleasure rather than hard work than that would finish us off in terms of doing all the right things.

We still don't in some countries have a nice experience when we sell a motor car to somebody. I think the work that EVP [Takao] Katagiri is doing in that area with the regions is probably the last brick, the last step of Nissan's improvement activities.