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Nissan Quits Europe To Focus On US, Japan, China

Back in December Nissan pulled its Infinity brand out of Europe. Now the European retrenchment is continuing as it quits Europe to focus on the US, Japan, and China markets. Called “operation performance plan” Nissan plans on reversing former CEO Carlos Ghosn’s expansion. The plan is due to be revealed at the end of May. Nissan had seen a push to increase volume with discounts and stretched product shelf lives. It cheapened the brand and drove customers away as newer models from competitors offered more.

Nissan now wants to strengthen its ties with dealers and is going about freshening all of its lineups as quickly as it can. It wants to bring back what it calls “pricing power” which it expects will return the company to profitability according to Reuters

Getting out of Europe frees up the limited capital Nissan needs for new products and future technology

Nissan dealership | Getty

Nissan exists in a partnership with both Renault/Peugeot and Mitsubishi. It wants to develop products without stepping on its alliance partners. So when it quits Europe it helps to bolster Renault/Peugeot in their home markets. It wants to expand plug-in electric hybrid technology in China, Japan, and the US. That would leave Mitsubishi to do the same in markets outside of those three. 

Getting out of Europe entirely frees up the limited capital Nissan needs to develop new products and future technology. It had a head start with the debut of the all-electric Nissan Leaf in 2010 but has squandered that lead. The Leaf is the first mass-produced EV available in the US. The first developed in the modern age was GM’s EV-1 but it was very limited production and only leased to users.

The plan was to have been unveiled earlier this year

Nissan Leaf
Nissan Leaf | Bryan Mitchell/Getty Images

“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,” a person familiar with the plan told Reuters. The plan was expected to have been unveiled earlier this year but the uncertainties of the future as it relates to the coronavirus crisis meant projections were more difficult to make. 

Nissan says its plan includes stepping up efforts to sell Qashqai and Juke SUVs in Europe. It’s unclear whether Nissan plans to maintain sales outlets for these two brands or whether it plans on rebadging them as Renaults or Peugeots. It seems a bit contrary to its announcement that it quits Europe altogether. Cutting models also means closing plants. It says going from its original projections of producing over seven million vehicles before the coronavirus shutdowns to a new number at a bit over five million means it could close up to 14 plants.

Over the last several years volume has increased while operating margins have decreased

A picture from the inside of a Nissan Titan showing the steering wheel.
2020 Nissan Titan | Daniel Acker/Bloomberg via Getty Images

Models in India, Indonesia, Malaysia, South Africa, Russia, Brazil, and Mexico will be cut to offer more focussed vehicles. In the US Nissan wants to expand its operating margins. Over the last several years volume has increased while operating margins have decreased. 

Plans now call for six all-new vehicles in the next three years. This will bring Nissan’s average age portfolio down from over five years to right at two years. Average brand portfolios tend to be between two to three years.