It wasn’t all that long ago that Nissan was down and thought to be on its way out. But the company has cleverly and aggressively done a 180 and is now providing returns that other vehicle manufacturers would undoubtedly love to achieve. Here’s part of what they did. By Gary S. Vasilash, Editor-In-Chief (ADP).
One of the phrases that is used by Nissan management with consistency during their discussions of their operations is “long-term, profitable growth.” To be sure, there is an acknowledgement of the fact that they are working at competing with products that are distinctive—here, the design philosophy is described as “clear, consistent, creative”—but even within that realm, profitability is a key. Cool, distinctive, even polarizing cars, trucks and minivans are certainly important to Nissan’s approach to the market, but that’s only part of getting the company to where it needs to be. So Nissan management is taking a hard look at what they do and how they do it. This is leading to significant changes.
Consider, for example, the fact that as recently as 1999 Nissan had 24 global platforms. Of those, only one had a global volume of >300K units, and, as Steve Wilhite, vice president, Global Marketing, Nissan Motor Co., notes, five platforms accounted for 62% of the firm’s global production volume. While that is certainly a situation that’s out of whack, the vigor with which it is being rectified is, perhaps, even more astonishing: “By the end of the next fiscal year [‘05], we will have consolidated the number of platforms to 15, with the top five comprising 91% of global production,” says Wilhite. “Four of the platforms will account for more than 400,000 units each, including two that will achieve more than one million production units each when Renault is included.” Consider the extent of that transformation.
THE FIVE PLATFORMS IN QUESTION ARE:
- B: Includes small models that aren’t—yet—available in North America. The models are: Cube, Cube Cubic, March, Micra (and future Renault models. Renault owns 44.4% of Nissan, which gives it control over the company. While there is sharing of products, plants and technologies between the two companies, the stated goal is to maintain two distinctive—at least from the point of view of the customers—organizations. Just as customers aren’t generally aware of underlying vehicle platforms, the Renault-Nissan sharing is something that is out of view.). (The B platform vehicle that is to make its way to North America is the next-generation Cube; the current generation, the second, was launched in 2002; it is primarily a Japan domestic market vehicle.)
- FF-L: The acronym signifies “Front-engine, Front-drive, Large.” The vehicles it encompasses are Altima, Maxima, Murano, Quest Presage, and Teana. (The Presage most resembles a Quest minivan; the Teana is similar to the Maxima sedan.)
- F-Alpha: Arguably the most “American” of the platforms, as it is the truck platform, used for the Armada, Titan, Infiniti QX56, and ‘05 models of the Frontier, Pathfinder, and Xterra.
- C: As with the B, co-developed with Renault. Presently, the C is used for the Renault Megane; no Nissan models yet.
- FR-L/FM: This is Front-engine, Rear-drive, Large and Front Mid-ship. It accounts for an array of products, including the Infiniti FX 45/35, M45 Concept, G35 coupe and sedan, Nissan 350Z, Stagea (Japan market wagon), Skyline (Japan market G35), and Fairlady Z (Japan market 350Z). One thing worth thinking about is that the FX is a five-passenger SUV and the 350Z is a two-passenger sports car, yet they fall within the same platform grouping.
|The Infiniti M45 Concept, G35 coupe, FX 45, and Nissan 350Z and Stagea are all built on the FR-L/FM platform. This indicates not only what can be done on a platform, but also the effort that is underway at Nissan to consolidate on platforms to increase economies of scale.|
As regards “long-term, profitable growth,” so far, so good. That is, in FY 2003, which ended March 31, 2004, Nissan reported an 11.1% profit margin and a 21.1% ROI.
Part of the way they’re working at Nissan on a global basis is through a series of three-year plans that were initiated by Carlos Ghosn, president and CEO of the global concern with the Nissan Revival Plan of 1999. Arguably, that was the Nissan Salvation Plan. In ‘02 the Nissan 180 Plan was initiated. This will be followed in ‘05 by Nissan Value-Up. Part of all of these plans is a mandate to increase sales. In FY ‘03 it had global sales of just over 3 million units. Projected sales for FY ‘04 are 3.3 million. At the end of FY ‘07 the goal is to have sales of 4.2 million vehicles, with more than one million sold in both the U.S. and Japan and 500,000 units in China. In addition to current models, between FY ‘05 and FY ‘07 they’ll be launching 28 new models, of which seven will be new to the line. And, while doing this, according to Mario Canavesi, senior vp, Marketing & Sales, Nissan Europe, “We will maintain double-digit operating profit margins and keep our return on invested capital at or above 20%.” And by “we” he means the global organization, not just Europe. Remember: This is about the entire organization, not just part of it.
Nissan has another global platform. It’s a marketing platform. It is based on the term “Shift_.” It is meant to make people understand that the company aims to change things, to shift them from what they are to something different. If the Value-Up plan works as well as its predecessors, plans that brought the company back from the literal and figurative brink, if the financial performance that has been achieved is sustained, they will have most certainly accomplished a Shift_ in automotive design and production the likes of which many of the company’s competitors can only envy.
One thing worth thinking about is that the FX is a five-passenger SUV and the 350Z is a two-passenger sports car, yet they fall within the same platform grouping.
FR-L/FM platform The Infiniti M45 Concept, G35 coupe, FX 45, and Nissan 350Z and Stagea are all built on the FR-L/FM platform. This indicates not only what can be done on a platform, but also the effort that is underway at Nissan to consolidate on platforms to increase economies of scale.