Motor Co. Ltd.'s new chief operating officer, Carlos Ghosn, says his determination to turn around the ailing Japanese automaker means returning to profitability in the next fiscal year. “It's non-negotiable,” the Brazilian native says. “We don't have a lot of time to fix Nissan's problems.”
Analysts say that's a fairly ambitious goal consideringannounced this spring that it has a $35 billion debt load, but add that it can be done. SA's former executive vice president took over his new post on June 25 as part of a deal that saw the French automaker take a 36.8% stake in Nissan in March.
He is touring Nissan's North American operations this month, taking time out to meet with the automotive press in Detroit and Los Angeles to explain his goals for restructuring the company, which he says will be fully outlined at the Tokyo auto show in October.
Mr. Ghosn sees no immediate Nissan plant closings, although he hints that is a possibility outside the U.S. if sales don't increase soon, and predicts there will be no Nissan-badged Renaults or platform-sharing in the U.S. market for at least three years. The first such synergy will be seen in Europe with the new generation of theMegane, due out 2002-2003, which will adopt the Nissan Sunny platform.
Mr. Ghosn was somewhat nebulous on the fate of Nissan's U.S. Quest minivan, now built in a joint venture withMotor Co., set to officially expire in 2004. What he does see is a cost-cutting drive primarily aimed at Nissan's supplier network, which he estimates accounts for 65% of the automaker's costs.
To that end, Mr. Ghosn is giving considerable attention to product development, purchasing and manufacturing costs. He is meeting with long-standing suppliers, he says, not to dismantle Nissan's keritsu system, but to insist that network players become more efficient. “Suppliers that are not profitable are not going to last with us,” he says. “There is no more room for a sense of complacency.”
Mr. Ghosn is asking suppliers to determine how they can meet Nissan objectives, and says modularity will be considered where suppliers can demonstrate it will save money. He expects suppliers will fall into three categories: Those that can meet Nissan's objectives on their own, those that can succeed by forming joint ventures and “those who say they can't take it.”
Revitalizing the Nissan brand also is key and Mr. Ghosn is making sure that a determination of what the brand will stand for in the future is made by all Nissan members. “Reality will come from confrontation of opinion,” he says.
Additionally, he believes Nissan needs to become more consistent in product design, “We have made some great cars and some not so great,” he says. Success in the U.S. market, he says, is vital to Nissan's future. U.S. sales were up 8% in the first half of the year. The automaker plans to introduce a series of new models, many of them light trucks, in the next few years, and is considering a full-size pickup.
Overcapacity is not a problem for Nissan in the U.S., whose Smyrna plant is considered one of the world's most efficient. But there are storm clouds on Japan's horizon. “We have over-invested for what we sell,” Mr. Ghosn says. “It's a cost we can't bear. We're sitting on a problem and we have to act.”