Renault Nissan MITSUBISHI New Strategy Release: "Leader" Nissan Starts Turning Around

The rain is coming.

On May 29th, the famous French car manufacturer Renault released a strike on the day of the transformation plan. The workers at the MCA factory in Barcelona, Spain, were at the Nissan Motor Factory in Spain, where workers burned their wheels and blocked factory gates to protest.

Layoffs, restructuring, cutting capacity, focusing on core technology and the market, the Renault Nissan MITSUBISHI alliance's new medium term business plan seems to be "starting at a disadvantage."

In order to improve the competitiveness and profitability of the three companies and save the troubled alliance, in May 27th, Renault Nissan MITSUBISHI alliance released a new medium-term career plan. At the same time, three points of the global automobile market also established a new strategy of "leader and conjoint" in the market, technology and vehicle types. Subsequently, Nissan and Renault released their specific development plans in May 28th and 29, respectively.

As part of the exploration of the new business cooperation model, the alliance believes that the above measures will maximize the apportionment of fixed costs and make full use of the members' assets, so as to enhance the competitiveness and profitability of the three companies.

The alliance predicts that under the "leader and concurrency" mode, the maximum investment will be saved by 40%. In this way, the alliance is expected to gain further benefits from the traditional synergy effect.

"The first round of feasible cooperation plan has been taken out, the division of labor is more clear, to prevent mutual wrangling. We do not want the union to break up, and we hope to solve the problem of overall survival at this stage. " In June 1st, automobile analyst Zhong Shi told the economic report reporters in twenty-first Century that "at this stage, the situation is tense, and the members are holding together to warm up to solve the problem of survival first, and other contradictions gradually resolve."

Similarly, in the industry view, the above strategy is aimed at dispelling worries about the collapse of the alliance after Ghosn's arrest, so as to establish suppliers, distributors and consumers' confidence in the development of the alliance. The new strategy will help enhance the operational efficiency of the alliance in China and the global market.

However, at the moment of great changes in the global automotive industry, whether we can truly achieve coordinated development is still facing challenges.

Nissan, the largest car manufacturer of the three companies in the league, was once seen as the engine of alliance profits. As the "leader" of the two largest automotive market in China and North America, Nissan determines the success of the new alliance strategy to a large extent.

Business streamlining and focus

However, Nissan is facing a crisis itself, and its sales and profits have slipped in the past year.

In May 28th, Nissan Motor Company CEO Uchida Makoto (Makoto Uchida) announced its financial performance in the 2019 fiscal year (up to 12 months in March 31, 2020).

In fiscal year 2019, Nissan's global sales volume was 4 million 930 thousand, down 10.6% from the same period last year, and sales for the first time in seven years were less than 5 million vehicles. The decline in sales is directly reflected in the company's financial data: in fiscal year 2019, Nissan net profit was 671 billion 200 million yen, compared with 319 billion 100 million yen in the same period last year.

This is Nissan's first loss in 11 years, and its biggest loss in 20 years. In addition, Nissan has not released the forecast for this fiscal year due to the significant impact and uncertainty of NCG's production and sales activities around the world due to the new crown pneumonia epidemic.

In the day's performance press conference, as part of the alliance's "new medium term career plan", Uchida Makoto announced Nissan's four year enterprise transformation plan.

Nissan will carry out structural reforms, streamline non profitable businesses and excess facilities, reduce costs through rational planning of production capacity, product line-up and cost, and prioritize and invest in business areas that can achieve stable recovery and sustainable growth. This is also considered to be the key to Nissan's turnaround.

"At present, the annual sales volume of the company is 5 million vehicles, and the target 7 million is very difficult to achieve." Uchida Makoto said at the press conference, "Nissan's transformation plan aims to ensure stable growth and avoid excessive expansion. We will focus on Nissan's core competitiveness and enhance its business quality, and at the same time achieve profitability through attention to the financial position and net income of the unit.

According to the plan, Nissan will carry out business restructuring and reduce costs. Under the premise of implementing standard rotation, it will reduce production capacity by 20%. By 2023, the annual capacity will reach 5 million 400 thousand. The global product line will be rationalized by 20% (from 69 vehicles to 55 below), and the fixed cost will be reduced by about 300 billion yen.

At the same time, Nissan will focus on the development of the three major markets in China, the United States and Japan, based on the alliance leader and consortium model.

Through the implementation of the plan, Nissan's goal is to achieve 5% of the operating profit margin and 6% of the global market share at the end of fiscal year 2023 (including the performance of Nissan's joint venture in China).

But at present, Nissan's condition is not optimistic. Under the attack of the new crown pneumonia, Nissan has begun to reduce the production scale of emerging market countries such as Indonesia and cut down 10% of the US factory capacity in addition to closing the Spanish Barcelona plant. The total number of layoffs is expected to increase to more than 20 thousand.

In addition, Nissan has said that based on the impact of the epidemic on the company, it is estimated that the operating losses for the fiscal year ended March 2021 will be at most 45 billion yen, with a net loss of 95 billion yen.

"I will make every effort to make Nissan return to its growth path." Uchida Makoto pointed out at the May 28th press conference.

Protecting China market

With the withdrawal of Renault and the adjustment of MITSUBISHI strategy and business contraction, China will also become one of the core markets of Nissan's future.

Gupta, chief operating officer of Nissan Motor Company (Ashwani Gupta), said in answer to a reporter's question, Nissan will use all its attention and resources to invest in new technologies and new models in the Chinese market in order to meet the needs of customers.

For Nissan's three largest market, Nissan wants to protect the development of the Chinese market, because it is in a state of rapid recovery.

"China's recovery rate from the epidemic is far beyond our expectations. In April, we saw that China's business sector grew by 1.1% over the same period, while the market share is also improving." Gupta pointed out that during the epidemic period, compared to the global market, the Chinese market also brought rare good news.

However, in the industry view, although Nissan's sales in China seem to be good, the layout of products is not perfect. A model of Nissan sells Nissan's sales in China. At the same time, high-end cars, Teana and Kroraina are lagging behind rivals, while Nissan's high-end brand Infiniti has been marginalized in China's luxury brand camps.

Nissan is also aware of the seriousness of the problem and will continue to improve its attention and devotion to the Chinese market. By importing products and technologies that are more in line with the needs of Chinese consumers, we will make full use of the resource advantages of the alliance.

Uchida Makoto pointed out at the press conference that China will have strong market demand on new energy, automatic driving and car union online. Nissan will also meet the needs of China's auto market from three key points: powertrain, vehicle networking and active safety allocation.

It is understood that as of fiscal year 2023, Nissan will import 7 pure electric vehicle models to China, and will carry e-POWER electric technology to core products. The electric vehicle sold in China will account for 23% of the total sales of Nissan China.

Intelligent network association is also a key link. By the end of 2019, there were 1 million 400 thousand Nissan brand vehicles equipped with intelligent network technology in the Chinese market. Globally, as of 2023, Nissan brand vehicles equipped with this technology are expected to reach 6 million vehicles.

In the field of automatic driving, as of fiscal year 2023, Nissan plans to import ProPILOT intelligent navigation technology to more than 20 vehicles including 20 markets in China. The annual sales of vehicles carrying the technology will exceed 1 million 500 thousand vehicles.

However, in the face of the new crown pneumonia epidemic in China's auto market, Nissan's annual sales target of 1 million 600 thousand vehicles still faces many challenges. Data show that Nissan sold 122846 units in April, an increase of 1.1% over the same period last year. In 1-4 months, the total sales volume of Nissan was 329397, down 29.2% from the same period last year.

"Now the whole industry is stagnant, the pressure of Nissan is different from others, so there is no special way. But in any case, the Chinese market is also the world's largest market. At present, the entire auto market is declining. For Nissan, just keep the relative share in China. " Zhong Shi finally said.

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