Chennai: Japanese automobile major Nissan Motor Company on Thursday said closure of Indonesian and Barcelona plants; reducing the number of models; rationalising production capacities; cutting down fixed costs by 300 billion Yen are some of the measures planned to achieve sustainable growth, financial stability and profitability by the end of fiscal 2023.
The company also said it will be exiting South Korea, the Datsun business in Russia and streamlining operations in some markets in ASEAN.
In a statement the company said the scalable plan will shift the company’s strategy from its past focus on inflated expansion.
“As part of the four-year plan, Nissan will take decisive action to transform its business by streamlining unprofitable operations and surplus facilities, alongside structural reforms,” Nissan said.
According to Nissan, the company will also reduce fixed costs by rationalising its production capacity, global product range and expenses. Through disciplined management, the company will prioritise and invest in business areas expected to deliver a solid recovery and sustainable growth.
Nissan said its action reducing costs and restructuring involves right-sizing Nissan’s production capacity by 20 per cent to 5.4 million units a year under the assumption of a standard shift operation.
The company is also aiming for a plant utilisation rate above 80 per cent, to make operations more profitable.
Other measures include rationalizing the global product line-up by 20 per cent, from 69 models at present to fewer than 55 models.
Intending to reduce fixed costs by approximately 300 billion yen, plans on the anvil include closure of the Barcelona plant in western Europe, and consolidating North American production around core models.
In Asia too, the company plans to shut down its manufacturing facility in Indonesia and concentrate on Thailand plant as single production base in ASEAN and Alliance partners to share resources, including production, models, and technologies.
To prioritise on its core markets and products, Nissan will focus on core operations in the Japan, China and North American markets.
Other moves include exiting South Korea, the Datsun business in Russia and streamlining operations in some markets in ASEAN.
The company will focus on global core model segments including enhanced C and D segment vehicles, electric vehicles, sport cars, and introduce 12 models in the next 18 months.
Nissan will also expand its presence in electric vehicles and electric-motor-driven cars, including e-POWER, with more than 1 million electrified sales units expected a year by end of FY23.
On the anvil are the launch of two more electric vehicles and four more e-POWER vehicles, increasing electrification ratio to 60 per cent of sales.
By implementing the plan, Nissan aims to achieve a five per cent operating profit margin and a sustainable global market share of six per cent by the end of fiscal year 2023, including proportionate contributions from its 50 per cent equity joint venture in China.
“Our transformation plan aims to ensure steady growth instead of excessive sales expansion. We will now concentrate on our core competencies and enhancing the quality of our business, while maintaining financial discipline and focusing on net revenue per unit to achieve profitability. This coincides with the restoration of a culture defined by “Nissan-ness” for a new era,” Makota Uchida, Nissan Chief Executive Officer was quoted as saying in the statement.
In India Nissan and Renault have a joint car manufacturing facility near here.
While questions were raised about the continuation of Datsun models in India, the restructuring plan is silent on the Indian operations while Nissan has said it would exit Datsun business in Russia.