Nissan demonstrates strong progress with Nissan NEXT transformation plan

Nissan Motor Co., Ltd. last week issued an update on progress achieved at the mid-point of its four-year Nissan NEXT transformation plan, coinciding with publication of the company’s full-year results for the 12 months to March 31, 2022.

The Nissan NEXT plan was launched in May 2020 with the goals of rationalizing capacity and streamlining operations, prioritizing core markets and focusing on core models and technologies, while revitalizing the foundation of the business.

Nissan is ahead of plan in key areas across its rationalization initiatives, creating a leaner business true to its strengths concentrated on delivering sustainable profitability. In the first two years, Nissan has optimized production, streamlined its product line-up, and refined its global management structure. These efforts have bolstered Nissan’s ability to respond to unprecedented transformations in mobility as well as global disruptions, while reducing Nissan’s breakeven point and generating material cost savings.

Nissan has also delivered progress ahead of plan for its prioritization and focus initiatives, improving the quality of its business foundations and positioning the company to progress its long-term electrification and carbon neutrality ambitions. Nissan will further intensify its focus on the seeds of future growth and revitalize its foundations through ongoing cultural transformation efforts.

In its Nissan NEXT update, the company has reported progress in the following areas:

1. Rationalization actions to strengthen agility and sustainable profitability

• Global production capacity reduced by 20%
• Product line-up reduced by 15%, with Nissan dedicating more resources to its most compelling models
• Global management structure refined from seven to four regions, creating a leaner, more agile organization
• Fixed costs optimized by 350 billion yen, 17% ahead of the original 300bn yen target

1. Prioritization & Focus enhances business quality and drives innovation

• Sustainable basis for long-term growth developed across core markets between US, Japan, China and Europe driven by core products and technologies
• Bold product renewal program has delivered 12 new models introduced in 18 months, with the ARIYA establishing new era of Nissan’s innovation and EV legacy
• Enhanced business quality with net revenues per unit increased by 18% to date, supporting operating profit margins of 2% for FY21 despite headwinds.

1. Foundation for Seeding Future Growth

• Continued implementation of cultural transformations initiatives between corporate purpose, diversity, equality and inclusion, strengthened corporate governance, alongside sustainability initiatives
• Established 2050 carbon neutrality goal and Ambition 2030 vision
• Outlined Alliance 2030 roadmap with common platform usage of 80% in 2026
• Announced Nissan EV36Zero in the UK to provide 360-degree solution
• Developed Nissan Intelligent Factory initiative to build next-generation vehicles and deliver carbon neutral production around the world by 2050

Ashwani Gupta, Nissan chief operating officer, said: “We have achieved momentum and delivery in the first half of our Nissan NEXT plan. The results are pleasing, especially achieved against a backdrop of severe market headwinds and intense competition. We must now build on this transformation to generate value and sustained profitability.”

Gupta cited examples of Nissan Next progress including a 19% rise in net revenue per unit in the key US market. In Japan, net revenue per unit has increased 38% on the new Note model. In Europe, net revenue per unit is up 38% on the all-new Qashqai model.

Makoto Uchida, Nissan chief executive, welcomed the progress on the transformation plan, adding: “As we prioritize every effort to deliver long-term sustainable growth, we will move towards a progressive future as Nissan accelerates its electrification goals and technology innovations. Nissan is on the right path, and we are confident the company will achieve its full potential – targeting a 5% core operating profit margin – while we pursue significant advancements in mobility and beyond.”

In the second half of the Nissan NEXT plan, the company will maintain its rationalization and prioritization efforts while further seeding its foundation for future growth, including:

• Increasing electrification model mix to 40% globally by 2026
• Developing lower cost, cobalt free lithium-ion batteries for next-generation EVs
• Pioneering all-solid-state batteries with a pilot production line established in Yokohama by 2024
• Expanding EV Hub concept from the UK to core markets in Japan, China, and the U.S.
• Building two all-new all-electric models at the Canton plant in Mississippi, US
• Expanding its EV battery reusing capabilities through 4R Energy corporation with dedicated facilities in the U.S. and Europe alongside Japan
• Expanding ProPILOT technology to more than 2.5 million Nissan and INFINITI vehicles by FY26, and
• Advancing latest driver-assistance technologies including next generation LiDAR technology for collision avoidance by the mid-2020s.

Uchida concluded: “Along with accelerated business performance, Nissan is continuing to evolve its corporate culture for a new era. We aim to deepen the support for our people and maximize the potential of everyone at Nissan to drive the innovations that enrich the lives of our customers. Our people remain Nissan’s greatest strength and will be a driving force as we pursue our long-term ambitions to empower society.”