Nissan’s in a bit of trouble (again), although it isn’t for the antics of its senior staff. As former wonder-CEO Carlos Ghosn fled for Lebanon hiding in a box, the company was facing falling revenues and profits. Market share and volume was in decline, and even the pioneering LEAF and Juke are looking distinctly average.
This article was updated on 10th June 2020 to reflect the announced “Nissan NEXT” midterm plan.
Market share started a slow decline
In the mid 2010’s there was talk of Nissan becoming another Toyota. Sales were up, market share was up and LEAF was a runaway success in the small (but growing) BEV space.
Then it started to go wrong. First in Europe, then the US, even in Japan. At one point it had 4 percent of the European market, today it’s hanging on to 2.5% (and there are signs that is going to sink further). The decline seems to be across the board, with LEAF struggling as more capable competitors arrive at a steady pace.
Although correlation doesn’t equal causation, it’s interesting to note Nissan’s US decline seems to align with the “buy American” rhetoric coming out of its political leadership.
China’s a high point, although it’s nowhere near as dominant as it was in the heady days of 2011. The general trend there is up after a shocking mid-2010s when Chinese manufacturers became more confident.
Volume is falling too
Europe has seen 2 straight years of falling volume, and the start of 2020 (pre pandemic lockdowns) seemed to carry that trend on. 2017 seems to be an outlier though, potentially fuelled by the launch of the new LEAF and a face-lifted Qashqai. Set it to one side, and the trend is a definite downward one.
The tale’s slightly different in the US, where volume peaked over 2016/17 before falling at least 6% for the next two years. 2019’s volume was around 2014 levels.
China is an odd one again. Volume fell for the first time in 2019, but only by a rounding error amount. However, the general trend is a slowdown.
2020 has thrown everything in the air. Trying to extrapolate trends is nigh on impossible and arguably a fool’s errand. A gambling man might have put money on the decline continuing – and certainly there were early signs this was happening.
There are no major new models planned for 2020, which suggests the decline would’ve continued. 2021 sees the launch of a new BEV SUV – Ariya – which met initial excitement until range and performance numbers started to emerge. As with LEAF, it looks distinctly middle-of-the-road.
Where did it go wrong?
Setting Ghosn’s somewhat dramatic behaviour to one side, Nissan has had problems for decades. The biggest complaint levelled at it is how long different generations of vehicles last.
While competitors will refresh or update models every 3-4 years, Nissan hangs on for 5 or 6. It isn’t just that models end up looking old and tired, it also fails to capitalise on its pioneering position in segments.
When it was launched in 2010, LEAF was hailed as an affordable and practical Electric Vehicle. It created a buzz and has gone on to be one of the most popular EVs. The original design lasted 7 years, tweaked under the hood but with style and performance largely unchanged. Instead of capitalising on the pioneering position, Nissan sat back and watched the cash roll in while BMW, Kia and others caught up and overtook them.
The same goes for the Juke, which created a lifestyle slant to the fledgling Crossover market and went without a major revision for 9 years. Micra/March generations can last for up to 10 years. Quashqai lasted for 7 years before the latest generation appeared in 2013.
Is it about to change?
By early 2020, a new executive team was in place. It wasn’t a case of tweaking personnel either, there has been a widespread clear out and restaffing. Out goes Ghosn’s “hero worship” style where you take individual credit, and in comes a more Japanese style of consensus and collectivism.
The new Senior Executive is made up mainly of long-term Nissan or Alliance employees. At the head is Uchida Makato, an anonymous long-termer with a reputation for pragmatism and a background in purchasing. Beside him is Stephen Ma, the CFO with experience in all the major markets. With a strong commercial and operational focus is the more visible Ashwani Gupta, whose background includes time at Renault and Mitsubishi. Finally we have Christian Vandenhende, who comes out of the Alliance and has both purchasing and quality in his background.
As individuals they’re anonymous, barely heard of outside of the company. As a group they’ve got a strong mix of commercial and change experience. Perhaps a good sign for the future, provided someone can get a grip on the fundamental problems with product, brand and agility.
The previous leadership coined “M.O.V.E. to 2022” as its mid-term plan. The plan was much of what would be expected from Ghosn: cost cutting and rationalisation. After he left, the theme continued.
Eager to stamp their own mark on the business, the new leadership has Nissan NEXT, a midterm plan to take the business to 2023. Unlike M.O.V.E. the plan makes greater use of the Alliance with Renault and Mitsubishi and is willing to sacrifice some markets for overall profitability.
Three things stand out in NEXT:
The focus on markets. China, the US and Japan are core focus markets for Nissan, something that’s not been expressly stated before. These three are where they will concentrate their growth and innovation plans, while other markets will see benefits from new models and are expected to maintain – not grow – their share.
Rationalisation of models. There are nearly 70 different Nissan models and this will be reduced to 55 over the next 3 years. They’ll also reduce the lifespan of their models from over 6 to under 4 years. By 2023 Nissan should have launched 20 new models, including a new suite of pure EVs to sit in major segments.
Alliance leverage. Greater use of Alliance assets will be central to some of their manufacturing decisions. Common floorpans will be extended to some upper body components, particularly in the European market.
Globally capacity is going to fall by a fifth. Plants in Spain and Indonesia have already been tagged for closure. Reductions are likely to happen elsewhere, not least the US.
For the time being the Sunderland plant has been saved from closure. There is still a question mark over its future given the UK’s departure from the bloc and a potential increase in export costs. Closing the plant would be a significant step with substantial costs involved, although senior management has continually warned this is possible.
Nissan finds itself in much the same position as when Carlos Ghosn was parachuted in back in 1999. It’s almost like his two decades at the helm was for nothing: falling sales, falling margins, products that are too long in the tooth. All of his making.
This time we have a team in place who read more like steady hands there to stabilise and consolidate than transform. I think that’s good news for Yokohama as it could do with settling down and some fundamental problems sorted out.
This time we have a team in place who read more like steady hands there to stabilise and consolidate than transform.
Don’t take too long though. BEVs are taking off, and with two fairly indistinct offerings and a legacy of old-age models to refresh, Nissan could be exposed again.