Nissan to leave Europe to expand in US, China & Japan

Nissan Motor Company plans to pull back production in Europe to focus on overseas ventures in the US, China and Japan in a scheme that represents a new strategic direction, according to people with direct knowledge of the shift.

Dubbed the “operational performance plan,” it is due to be announced on May 28 and serves to predominantly fix and go beyond former leader Carlos Ghosn’s – who was ousted from the company in 2018 – particularly aggressive expansion plan, the people told Reuters this morning.

The scheme lays out a three-year plan to restore dealer ties, refresh line-ups and regain pricing power, following the company’s swift decline in the US, including a significantly cheapened brand. Those involved added they hope this will increase their overall profitability.

One of the people said: “This is not just a cost-cutting plan. We’re rationalising operations, reprioritising and refocusing our business to plant seeds for the future.”

Alliances are also on the table for expansion, as the plan details an aim to cut competition and expand cooperation with partners. Nissan will follow Mitsubishi in producing plug-in electric hybrid vehicle technology, with them taking the lead in markets such as Japan and China. It is likely that they will be succeeded in Europe by Renault, based in France.

They hope this will free resources to allow them to invest in the products and new technologies in the United States, China and Japan. The initiative is being led by Nissan’s COO Ashwani Gupta.

One of the anonymous sources said: “The net effect is even though we reduce our R&D spend this year versus last year and make other savings, we pump those freed-up resources back into core markets and core products.”

Current estimates dictate the plan will take up to two weeks to be finalised, with sales and earnings targets being complicated by the long-term effects of the coronavirus outbreak, they said.

Nissan has already put its annual global production capacity at over 7 million vehicles over a three-shift day. The new plan is based on a two-shift day, with the 14 closures, puts capacity at about 5.5 million units.

Nissan will try to maintain a presence in Europe through increased production efforts for its SUVs. In Asia, there are plans to further expand sales in Thailand and the Philippines, which, alongside Australia total roughly 90% of sales in the region.

The plan hopes to rebuild the automaker’s brand in the US market, with hopes that it will no longer be seen as a bargain brand. Though its NA sales have grown, its operating margin has narrowed of late.

One of the people said: “For several years, everything was based on volume growth, then we shifted our emphasis to the quality of sales, and we did it overnight. We did it too fast, and that choked our business.”

Nissan’s models have an average age of five years. The plan details an initiative to launch significantly redesigned cars, including a next-generation Rogue-crossover SUV, to reduce the lifespan to around 3.5 years. They also said they would reduce sales to rental markets and other fleet operators.

Nissan has also been slow to release new models in their native Japan, as well. The plan also details to introduce six brand new or redesigned models over the next three years to the Japanese auto market to bring the average line-up age to less than 2.5 years from an as-of-yet undisclosed figure. The average age of line-ups in this field usually hover between two to three years.

Finally, in China – the world’s largest auto market – Nissan has announced its intention to design vehicles more specifically for consumer wishes in the country. Its China-only Venucia brand will need to be repositioned to better respond to competition from a multitude of local brands, according to the anonymous sources.

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