12 Success Lead Change Append 2 Nissan

Nissan Motor Co., Ltd

Share of Sales by the World Car Market 2001

Daimler-Chrysler(US&GER)

7.8%

Toyota(J A)10.3%

Ford(US)12.0%

Volckswagen(GER)8.9%

GM(US)14.1%

Peugeot(F)5.5%Honda(J A)

4.6%

Hyundai(KR）4.6%

Nissan(J A)4.5%

Renault(FRA)4.2%

Other23.3%

215,370 billion yen

197,330 billion yen

134,244 billion yen39,549 billion yen

64,638 billion yen

56,209 billion yen

165,327 billion yen

96,331 billion yen

60,896 billion yen

Net Sales (1990-2002)

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Toyota Honda Nissan

単位：億

(Billions of yen)

(Year)

Ordinary Income (1990-2002)

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Toyota Honda Nissan

Introduction

Company Name ： Nissan Motor

Company Highlights

Paid in Capital :604.6 (billions of Yen)

Employees ： 125,099

Establishment ： Dec, 1933

Representative ： Carlos GHOSN

Global Retail Sales ： 2,596,530 (units)

Financial Highlights (2001)

Operating Margin ： 7.9%

Net Sales $ 51.6b

Ordinary Income $3.5

Operating Income $ 3.1

Net Income $3.1R&D Investments $2.2

Capital alliance of Japanese makers

GM （ US ） Isuzu12.0 ％

Suzuki20.0 ％

Fuji HeavyIndustries20.0 ％

Ford （ US） Mazda33.3 ％

Renault （ FRA ）

Nissan Motor44.4 ％

DC （ US&GER ）

Mitsubishi Motors37.3 ％

Opel （ GER ）

Fiat （ ITA ）

Land Rover （ UK ）

Jaguar （ UK ）

Volvo （ SWE ）

Nissan Motor Co.Net sales & ordinary income

5,000,000

5,200,000

5,400,000

5,600,000

5,800,000

6,000,000

6,200,000

6,400,000

6,600,000

6,800,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001-300,000

-200,000

-100,000

0

100,000

200,000

300,000

400,000

Net sales Ordinary income

0

500

1000

1500

2000

2500

3000

3500

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

(Billions of Yen)

Net Debt (Automotive Business)

(Year)

Vision / MissionVision

Mission

Nissan : Enriching People’s lives

Nissan provides unique and innovative automotive products and services that deliver superior measurable values to all stakeholders* in alliance with Renault.* Our stakeholders include customers, shareholders, employees, dealers, suppliers, as well as the communities where we work and operate.

History

Major Events in Nissan’s History -1

• (1933) Jidosha Seizo Co., Ltd., predecessor of Nissan Motor Co., Ltd., is established in Yokohama.

• (1935)The first car manufactured by a fully integrated assembly system rolls off the line at the Yokohama Plant.

Major Events in Nissan’s History -2

• (1960)Nissan wins the 10th Annual Deming Prize for excellence in industrial engineering.

• (1972)Cumulative domestic production surpasses 10 million units.

• (1980)Cumulative exports surpasses 10 million units.

• (1980)Nissan Motor Manufacturing Corporation U.S.A. (NMMC) is established.

• (1984)Nissan Motor Manufacturing (UK) Ltd. is established.

Major Events in Nissan’s History -3

• (1988)Nissan European Technology Centre Ltd. is established in UK.

• (1990)Cumulative production surpasses 50 million units.

• (1994)Nissan Middle East FZE is established in Dubai, UAE.

• (1995)Vehicle production at the Zama Plant ceases.

Major Events in Nissan’s History -4

• (1999)Nissan and Renault signs an agreement for global alliance, including equity participation.

• (1999)The company announces the Nissan Revival Plan (NRP).

• (2002)The company announces new three-year business plan NISSAN 180.

Renault

Renault Financial Highlights (2001)

Operating Margin E 473

Revenues (euro million) E 36,351 　Operating Income E 704

Renault net Income E 1,051Investment E 3,314Total workforce (number of persons) ：140,417

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

1997 1998 1999 2000 2001Revenues

Renault’s revenues (1997-2001)

Nissan Revival Plan

Carlos, GHOSN・ Born in Brazil (March,9,1954)

<Education>・ Graduated from E´cole Polytechnique ・ Graduated from E´cole des Mines

<Experience>・ (1978) Ghosn is hired Michelin・ (1985) became COO of Michelin Brazil・ (1989) became COO of Michelin North America・ (1996) became Executive Vice President of Renault 　　・ (1999) became Chief Operating Officer of Nissan motor・ (2000) became chairman and COO of Nissan Motor・ (2001) became chairman and CEO of Nissan Motor

Nissan Revival Plan• First announced in October of 1999,

Nissan Revival Plan (NRP) went into action in April, 2000.

• When the NRP was first announced, Nissan’s executive committee announced three bold commitments.

• If any of these were not met, the executive committee members promised to resign.

NRP’s Objective• The objective is to free resources from

non-strategic, non-core assets and investment more in our core business －cars － while at the same significantly reducing Nissan’s debt.

“The aim is to grow the company, not shrink it.” said Ghosn.

Goal of Nissan Revival Plan

1. Return Nissan to profitability for 20022. Achieve a consolidated operating profit of 4.5%

of sales by 20023. Reduce costs by 1 trillion Yen and net debt

from 1.4 trillion Yen to less than 700billion Yen by 2002

As ResultsReduce headcount :21,000 (14%) for worldwidePurchase strategy :Appropriate 200billion Yen for Reserve FundThe effect of cost redact :1 trillion Yen

Substance of Nissan Revival Plan

Major Contents of NRP

Enterprise development ： Profitable growthPurchase strategy ： It is 20% of cost reduction in three years.　　　　　　　　　　　　　　　　　　　 　 suppliers Reduction (1,145⇒600)Production ： Achievement of optimal production efficiency / the optimal cost. 30% curtailment of productive capacity Sales, General and ： To be reduced 20% 　 administrative costs Slimming of a operating network (Number 20% curtailment of direct management dealers, 10% curtailment of offices, etc.) financial cost ： Strengthening financial management reduction of financial cost. Cancellation of strategic stock possession

( Stock sale of an affiliated company, etc) 　R&D ： Effective development of R&D capabilityOrganization ： The change to the global organization from

the organization according to area 　

Results : Attaining the NRP Goals• Purchasing costs : reduced 20 %.• Plant capacity utilization : risen from

51%→75%.• A revamping of the domestic sales

system has reduced sales and administrative costs.

• Worldwide stuffing has been brought in accordance with needs.

• Non-core assets have been sold.• A rededication to R&D has been

matched by 25% increase in efficiency.

Essence of NRP

達成方法

What is ‘Commitment’ ?・ A return to net profitability in 2000.

・ A minimum operating income to sales margin of 4.5% by 2002.

・ Consolidated net automotive debt reduced to less than \700 billion ( $58 b) by 2002.

Nissan announces NRP conclusion one year earlier than planned(2002→2001).

CEO (Hanawa chairman)

COO (Ghosn President)

Executive committee

Planning Domesticsales

Overseasales R&D Produc

-tion Purchase Admin. Europe OthersNorth America

1. Growth of business （ 50 ）

2.Purchase （ 12 ）

3.Production （ 10 ）

4.R&D （ 13 ）

5.Marketing （ 10 ）

6.General admin. （ 10 ）

7.Finance & cost （ 12 ）

8.Cut of the model （ 13 ）

9.Org. & decision （ 12 ）

The name of CFT (members)

Structure of Cross Functional Team

* ○（２） ○（３）

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○（３）

○（１）

◎（４）

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○（１）

◎（６）

○（１）

○（１）

◎（９）

○（１）

○（１）

○（１）

○（４） ◎（１）

○（１）

○（２）

○（２）

○（１） ○（１）

○（１）

◎（５）

○（１）

○（１）

○（３） ◎（４）

○（３）

○（２）

◎（２）

○（２） ○（５）

○（２）

○（１）

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○（２）

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○（１）

Investment for the Future• With an additional 1,000 engineers

being added to Nissan’s technical team.

• Massive investments in R&D ( to 4.5% of revenues).

• Investments in capital expenditures ( to 5.5% revenues).

Building Competitive Advantages

New Cars after NRPMarket launching model Sales’ market

2001, Jan. CIMAJapan & North America

Feb. PRIMERA Japan & Europe

Mar. XVLJapan & North America

Oct. STAGEA Japan

2002, Apr. March Japan & Europe

Larel Japan

FAIRLADY- ZJapan & North America

CefiroJapan, Europe& North America

SKYLINE Japan & Europe

TeranoJapan & North America

New Strategy (NISSAN180)

Nissan will sell one million additional units worldwide by fiscal year 2004.

Nissan will realize an eight % operating margin under constant accounting standards.

Nissan will achieve Zero net automotive debt by the end of 2004.

180

Renewal <March>

March New-MARCH

Driving Wheel Front Front

Seating Capacity 5-persons 5-persons

Engine Displacement 1.3 Litter 1.4 Litter

Length 3,720 mm 3,695 mm

Width 1,585 mm 1,660 mm

Height 1,425 mm 1,525 mm

Price (in Japanese Market,$000)

$11 $10

Renewal< >

Z New-Z

Driving Wheel Rear Rear

Seating Capacity 2-persons 2-persons

Engine Displacement 3.0 Litter 3.5 Litter

Length 4,520 mm 4,310 mm

Width 1,800 mm 1,815 mm

Height 1,255 mm 1,315 mm

Price (in Japanese Market,$000)

$38 $30

Four Pillars of N 180• Generating more revenue.• Reducing costs.• Increasing both quality and

speed.• Maximizing the Alliance with

Renault.NISSAN 180

Ready and Positioned for Growth

The NISSAN180 goal

• One million additional units will be sold by the fiscal year 2004 (October 2004 to September 2005).

Japan ： +300,000 unit

US ： +300,000

Europe:+300,000

Other markets+300,000

Global Total Market Share Targets: 5.1%

Building the Brand• 28 all-new products will be launched in

all segments, all over the world.• Company executives set the goal of

placing at least three Nissan cars in Japan’s top-ten monthly best-selling lists.

• Nissan’s new brand identity : based on the traditions of technology, imagination and passion.

Strengthen Designing Power• Nissan Design Europe will play a strategically

important role in Nissan’s creative network.• Nissan Design Europe will be home to around

50 international designers, modellers and support staff.

• Nissan Design Europe has increased its staff by 25%, a further indication of the importance of the studio to Nissan’s global design operations.

“Design is fundamental at Nissan. Most importantly it is a key driver behind NISSAN

180, our global growth plan.” said Carlos Ghosn.

Summary Nissan New Business Structure and Model

1) Cross Functional team

2) Restructuring

3) Cut costs + reinvestment1) New Engineers2) Massive R & D investment

4) Restructure to permit Quality and Speed

5) Alliance with Renault

Summary Nissan New Business Structure and Model

1) The New Model of Nissan….Nissan 180

New Strategy (NISSAN180)

Nissan will sell one million additional units worldwide by fiscal year 2004.

Nissan will realize an eight % operating margin under constant accounting standards.

Nissan will achieve Zero net automotive debt by the end of 2004.

180

Understanding the degree of change required

1.1b

Gerry J Gannon

Institute for International Research