Nissan, like its partner Renault, is at a turning point in its history. The Japanese manufacturer, whom the coronavirus crisis surprised even while it was going through a serious financial crisis, announced at the end of May a net loss of 6 billion euros on its last financial year, as well as a vast transformation plan. At the same time, members of the Renault-Nissan-Mitsubishi Alliance have clarified how they planned to divide responsibilities to optimize their partnership and reduce their costs. Nissan General Manager, appointed in december latest, Makoto Uchida , returns for “Les Echos” on how he intends to turn around the company and how he sees Nissan’s future relations with Renault.
How is Nissan coping with the Covid-19 crisis?
Even before this crisis, Nissan was already working to improve its performance. At the start of the year, we were still hoping to maintain a certain level of profitability as well as a global market share of 5.8% over the fiscal year that ended in March. But the epidemic arrived and we finally recorded, with the decline in our sales in the last quarter, an operational loss for the year.
It should be noted that this does not take into account, for calendar reasons, our results in China over the period. With China, we would have managed to generate a slight operational profit. The good news for us is that we have maintained our market share at 5.8%.
The group still recorded a very significant net loss?
Yes, because we have reviewed our strategy in depth, to ensure that our industrial tool is properly sized to generate profits. For years, we have been focused on overly large volume targets. This was done at the expense of our prices, especially in the United States, and the value of our brand.
Our strategy is now focused on the quality of sales. We will stop setting unattainable goals and aim for much more realistic volumes. So we have to adjust our production capacities. This is why we recorded very heavy impairment charges in our results. But it is a kind of cleaning.
Does the prolongation of the Covid-19 crisis not risk complicating these plans?
It is true that the situation is complicated and very fluid. We have not yet been able to give estimates of results for the current fiscal year. We will return to the market as soon as we have clearer prospects. For now, we estimate that global sales, all brands combined, will fall by 15% to 20% over the fiscal year from April 2020 to March 2021. We see the market recovering differently depending on the country.
For example, the recovery is already there in China. Nissan sales increased 1% year-over-year. In May, this increase reached 6.7%. Unfortunately, there are more uncertainties in other markets such as Europe, the United States or Latin America. And we must always keep in mind that a second wave of contamination is possible.
In the long term, do you think this crisis will change the automotive industry?
Yes, the mobility revolution that has been anticipated for years will happen faster than expected. For the first time in history, we have all experienced the same crisis directly. It was not a disaster going on far and you were watching on TV.
Everyone has had the same experience and will therefore adapt their lifestyle. This can lead to a different use of public transport, a surge in teleworking and a greater demand for personal cars. I want Nissan to be ready to respond to these new needs and new services.
How to transform Nissan to face these changes?
This is the content of the “Nissan Next” plan that we have presented. It is not just a simple plan with medium-term objectives, it is first of all a question of rationalizing our organization. Currently, we have a production capacity of 7.2 million vehicles per year, but we need to get closer to the 5 million, which corresponds to what we actually manufacture.
This will involve a reduction in the number of models we offer, but it is also an opportunity to rejuvenate our offer. This rationalization will lower our fixed costs, but it is above all the only way to put the group back on the growth path. With this new strategy, we will focus on our three priority markets: China, the United States and Japan.
Which model could embody this “new” Nissan that you are trying to generate?
We are betting a lot on the Ariya, an all-electric model that we will be presenting next July. The commercial version is going to be quite close to the concept that we unveiled last year in Tokyo. It is a concentrate of our best technologies, in terms of empowerment, electrification and design. There is a lot of internal excitement around this project.
The last two years have been very difficult, in terms of management and performance, but I keep saying that Nissan is much better than that. It’s time to prove it.
What about Europe? Nissan is losing a lot of money. Have you considered withdrawing from the Old Continent?
We never envisioned the Nissan brand leaving Europe. This brand has great strengths, in the electric or autonomous car, these are areas where it can be appreciated. But we have to actually cut our costs , which is why we have been led to make difficult decisions. We must also use the assets and expertise of Renault, our partner in the Alliance, to improve our competitiveness.
You have announced the closure of your Barcelona plant. Why ?
As part of our reflections on our industrial footprint in Europe, the question naturally arose. The factory encountered difficulties, with a very low utilization rate [it produced 55,000 vehicles in 2019 for a capacity of 200,000]. The closure project was a difficult decision to make, we are currently discussing it with our employees.
Could you transfer production lines to Renault factories?
Renault already makes vehicles for us, such as vans and vans. We are precisely thinking about the distribution of the roles of each in the manufacture of vehicles. Renault will see if it can be competitive to produce vehicles in our factories, and vice versa for us.
You produce the Micra in the Renault factory in Flins. What conclusions do you draw?
By the time it was taken, it was probably a good decision. Then the situation deteriorated, and the costs did not develop as we would have liked. Today, we are working with our partner to find ways to make costs more competitive.
Have you offered to Renault to produce the Captur and the Kadjar in your factory in Sunderland, in the United Kingdom?
Nissan’s industrial footprint will be a key element in strengthening the group. There are discussions, I cannot say more today, but the members of the Alliance must support each other, provided of course that the competitiveness is there.
The situation of Sunderland remains however uncertain. It is a large factory, which has its history, which produces one of our flagship models, the Qashqai, but which exports a large part of the production to Europe. Britain’s Brexit decision on possible customs duties will have a huge impact for us . If things go wrong, we will have to resize the tool.
What is the level of trust today between Nissan and Renault?
I am very comfortable, and very happy to work with Jean-Dominique Senard, Clotilde Delbos, and Osamu Masuko [the leaders of Renault and Mitsubushi]. We sat around the table to look at how to cooperate. In January we announced the leader / follower strategy, and at the end of May we explained a little more precisely what this means.
We have not announced major objectives, in billions of synergies, or in millions of units sold. No, we have looked at how the Alliance can contribute to each of the three manufacturers, to reduce the fixed costs of each, optimize its assets. How we can further pool our strengths by focusing each on what is our strength and by calling on our partners where they are best. Each of us can no longer do everything alone.
You will divide up, in particular, the main areas of research. How are you going to deal with the issue of intellectual property?
This subject is still under discussion.
What is your position on the subject of batteries within the Alliance? What do you think of Renault’s commitment to the European consortium in this area?
Our electric vehicles must be competitive, and the battery will be the key component in the future. I can guarantee you that having batteries at a competitive price is a subject that the Alliance is discussing in depth.
Basically, what can Renault bring to Nissan today?
Renault is a very important partner, there are no other alliances in the automotive industry that have been so successful for 20 years. We each have a very strong culture, this is called diversity. We learned a lot from Renault.
The mass formed by our three companies, for purchasing and supply chain, is also a huge asset. The situation has become more difficult in recent years, but today we are precisely reviewing the benefits that the Alliance can bring to each other.
Would you like to see the capital structure of the Alliance evolve?
We have many other subjects of much higher priority. This is not a topic for discussion today.