TodayApril 17, 2022

Nissan and Renault; the next giant

Ghosn has a cult-like following in Japan

The takeover of Chrysler by Daimler-Benz in 1998 may have been the biggest news that year, but a very solid merger was formed the following year that is gaining global momentum.

Renault’s chief executive Louis Schweitzer, now Chairman, was watching its share of the global market grow. Renault had made a forage into the United States that wasn’t successful, but the rest of the world knew Renault as a formidable player. While the world was watching Nissan go down in marketshare, Schweitzer swooped in and bought a 37 percent controlling interest of Nissan. Shortly thereafter Renault bought 44 percent interest. In turn, Nissan owns 15 percent of Renault. In North America, Nissan has vehicle manufacturing plants in Smyrna, Tenn.; Canton, Miss.; and Aguascalientes and Cuernavaca, Mexico. Globally, Nissan vehicles are produced in plants in Japan, the United Kingdom, Spain, Thailand, China, Taiwan, the Philippines, Malaysia, Indonesia, Pakistan, South Africa, Kenya, and Egypt.

Nissan brought in Carlos Ghosn in June 1999, from Renault. Ghosn was born in Brazil to Lebanese immigrants. As a child, he moved to Lebanon and then on to France. Nissans marketshare in 1999 was around 4 percent. Today it is 6.35 percent. In a case study for General Motors and Ford Motor Company, Nissan sold off assets that were not core to their business. Nissan cut jobs, shored up their losses and started the slow climb in marketshare by bringing out a new product and their sales have been going up ever since. Like Honda and Toyota, Nissan built its own luxury line, instead of buying older companies with lots of heritage and problems of their own. Infiniti, however, didn’t fare well at first and it wasn’t till the homerun Infiniti G35, built by a race car driver, hit the streets that Infiniti took off. Expect another homerun when Infiniti brings out the cultish Skyline GT-R, always known as Nissan the GT-R could be in the luxury line.

Last year Ghosn got the nod to head both Nissan and Renault.

Ghosn is still not interested in taking chances with models. In Tokyo, Japan at a meeting with journalists he stated that hybrids were just one solution and he wasn’t sure that it made sense for Nissan to go the hybrid route. He was quoted recently as saying, “I hate selling cars at a loss.”. In Nissan’s case, Ghosn might be right. At the end of 2006, diesel fuel will be comparable to European diesel fuel, around 15 parts per million (ppm) of low sulfur, instead of the 300ppm that is currently in America’s diesel fuel. This would allow Europeans to bring more diesel engines into the United States. Diesel gets about 25 percent better mpg, and 65 % better torque. Diesel engines cost about $2,500 more than their gas counterpart, but when you compare that to $5,000 or more for a hybrid, diesel looks pretty good. Expect Nissan to put diesel engines in it’s Titan pickup and Armada and QX56, their large SUVs. They are looking into various sources of diesel engines right now. Another point in Nissan’s favor is they understand small cars. Europe and Japan are known for their small cars and Nissan and Renault both have experience. Even though Ghosn is not hot on hybrids they will be bringing out a 2007 Altima hybrid. In February at the Chicago Auto show, Nissan will show a refreshed Maxima and a new interior on their Quest minivan. In April at the New York Auto Show Nissan will show the all-new Nissan Altima and the all-new Infiniti G35. Nissan already has flex-fuel Titans, mainly in the midwest where they can be fueled with E85 (85% ethanol and 15% gas).

Nissan’s next move is to move its U.S. headquarters from California to Nashville, Tennessee. Nissan already has a manufacturing plant in Tennessee and Mississippi. According to Fred Standish, Director of Corporate Communications, who just signed the papers for his new home in Nashville this morning, “Tennessee is a business-friendly state. All the surveys have said so and the Governor is very pro-business.”

2005 is the first year that Nissan (and Infiniti) Corporation has surpassed 1 million in production. In the first quarter of the fiscal year 2005, Nissan sold a total of 879,000 vehicles worldwide, an increase of 14.3% compared with last year, supported by new and existing products. This fiscal year, Nissan plans to release a total of six all-new models around the world, including the new Serena minivan and the Otti minicar recently launched in Japan. The full line of the Infiniti brand is being sold in India. Nissan Motor Co., Ltd., today announced financial results for the first half of the fiscal year ending March 31, 2006. In Japan, the fiscal year Net revenues amounted to 4.491 trillion yen (the US $41.01 billion, euro 32.95 billion) in the April-to-September period, up 12.1% compared with a year ago. Operating profit totaled 411.5 billion yen (the US $3.76 billion, euro 3.02 billion), up 2.0%, while Nissan’s operating profit margin came to 9.2%. Ordinary profit amounted to 395.6 billion yen (the US $3.61 billion, euro 2.90 billion), down 1.4%. In the six months through September, net income after tax totaled 230.7 billion yen (the US $2.11 billion, euro 1.69 billion), down 3.4% compared with the same period last year due to one-time charges in the first quarter. The charges related to a change in Japanese accounting standards for the treatment of fixed assets and the introduction of Nissan’s defined contribution pension plan.

Excluding these one-time charges, Nissan’s net profit increased by 4.1% to 128.2 billion yen (the US $1.19 billion, euro 0.94 billion). Ghosn has his hands full. Renault is being carried by Nissan, even though the Renault Clio was named 2006 Car of the Year by European journalists. According to MSNBC, in 2005 Renault lost it’s number one position as the biggest brand in Europe to Volkswagen.

Ghosn will need to keep Nissan in China, America, and Japan where it already has a presence. Renault already has a presence in the Middle East and Europe. Ghosn has a cult-like following in Japan and has been heralded as the comeback king. He is in charge of Renault, Nissan, and Infiniti. Europe will be his biggest test.

Lou Ann Hammond

Lou Ann Hammond is the CEO of Carlist and Driving the Nation. She is the co-host of Real Wheels Washington Post carchat every Friday morning and is the Automotive, energy correspondent for The John Batchelor Show and a Contributor to Automotive Electronics magazine headquartered in Korea. Hammond is a founding member of the Women's World Car of the Year #WWCOTY, and board member of the Women in Automotive.

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