Nissan’s In Huge Trouble-Can It Recover?
Nissan is in huge trouble, especially in the US. Sales, and even more importantly profits, have plunged this year. There have been scandal three CEOs in three months, and a lack of new or revised products as it looked to quick fixes to mask larger problems. It was a pioneer in all-electric car development with the Leaf but has fallen far behind in EV technology since its introduction in 2010.
Of course, Nissan is well aware of its current situation. It has a new CEO in Makoto Uchida, who has vowed to turn the number two Japanese manufacturer around. Last week at a presentation at Nissan’s world headquarters he explained some of his plans, and they include lots of new vehicles starting in 2020.
All-new “Ariya” is one key to future development
A completely new all-electric crossover called Ariya will go on sale in Japan next year and should reach the US by 2021 if not sooner. “Future growth will come through new models,” he said. The Ariya will be the first EV utilizing a dedicated all-electric platform Nissan developed with Renault.
It’s the obvious mandate as Nissan’s average vehicle age is almost five years old. The Rogue, which is a top-selling crossover in spite of its age, is almost six years old. Things are moving too fast for products in hot segments to be that old. Next year will see a wave of new vehicles including a new Rogue which will see Nissan’s e-Power hybrid system.
Facing even more trouble.
But Nissan will be facing more trouble than just a lack of new products. According to Automotive News it will be cutting 12,500 jobs over the next year. It will also be cutting some slow-selling models as it tries to adjust production. That also means reducing yearly production from 7.2 million vehicles 6.6 million.
Profit margins are almost nil for vehicle manufacturing. While the average profit is 6%, Nissan’s is 1.4 this year.
Ever-increasing sales targets set by former CEO Carlos Ghosn
One of the main ways that Nissan sold the product was by setting unrealistic sales targets. To meet those targets dealers would chop prices to where there was barely any profit. Fleet sales to rental companies was another way to move products to achieve these goals. Uchida has said this triggered Nissan’s downturn.
“A culture developed in which people had no choice but to promise that they would deliver the unachievable during the goal-setting process,” Uchida said. “This led employees to avoid taking initiative, working together, or solving issues. To hit overambitious growth objectives, people tended to pursue short-term gains. This affected investments in new technologies and products, and in the facilities and people that are essential for our future success.”
Now he says Nissan has set objectives that are challenging, achievable, and understandable.
By 2021 it is likely to see a new Titan full-size pickup, Frontier midsize truck, Rogue crossover, Leaf EV, and more. The new Ariya will also be launched, which not only features Nissan’s newest electric platform but also a gang of new driver-assist technology. It is really looking to the Ariya to be the foundation for Nissan’s path forward.