Successor to Carlos Ghosn says push for market share can hurt brand in the long term
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This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 8, 2017).
YOKOHAMA, Japan -- Four months into his job, Nissan Motor Co.'s new chief executive wants the company to slow down, worried its rush to expand sales was pushing it off track.
For the past five years Nissan chased an ambitious goal set by then-Chief Executive Carlos Ghosn of achieving both an 8% share of global car sales and an 8% profit margin. It fell short on both.
The plan stretched Nissan too far, Mr. Ghosn's handpicked replacement, Hiroto Saikawa, said in an interview Thursday, calling for more sustainable targets. "We are going to have steady and solid growth -- this is the message," he said.
The revised Nissan strategy is the latest example of global auto makers casting a wary eye on incentives, especially in the U.S. where s hrinking sales have raised competition.
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Nissan's global market share fell to 6.1% in the year ended March 31 from 6.4% six years earlier when the Ghosn plan was announced. The company did manage to capture a larger portion of the U.S. market, but that growth came at the expense of margins, as Nissan piled on financial incentives to move cars off the lot. The company's operating margin was 6.3% in the year ended March 31, barely up from 6.1% in the year ended March 2011 despite a rapid rise in global auto demand over those years.
Since taking over in June, Mr. Saikawa has been working on a new midterm plan. One pillar is cutting back on discounts, which he said were feeding the impression that Nissan vehicles were worth less than the competition.
"If we say you should get 1% more market share, people easily get into pushing incentives," he said. "We should be very cautious not to push too much for the short term."
Nissan offered an average of $4,442 in incentives on its vehicles in the U.S. in August, slightly lower than its U.S.-based rivals but almost double that of Toyota Motor Corp. and Honda Motor Co., according to analysis by Jefferies, an investment bank.
Mr. Saikawa, a 40-year veteran of Nissan, served as enforcer for the big changes Mr. Ghosn brought after taking the reins in 2001, according to employees and people who know him. Mr. Saikawa oversaw procurement when Mr. Ghosn was driving suppliers to give Nissan a better deal.
Mr. Saikawa hopes to burnish Nissan's image, and ultimately its margins, by pushing out a series of electric vehicles. The new Leaf electric car, introduced Wednesday, includes self-driving and self-parking technology. Nissan also hinted Thursday that a battery-powered crossover sport-utility vehicle was coming.
"This could be a test for us to focus on enhancing the brand," said Mr. Saikawa. If it works, he said, "we increase the penetration of the market or we get pricing power," but "if we do things wrong, then it's going to throw us off the line."
Nissan's new Leaf has expanded range on a single charge of 150 miles, and the company said Thursday it would introduce a version in the next 12 months with more than 225 miles of range by U.S. standards, or about 300 miles by some other markets' standards.
Mr. Saikawa aims to make Nissan less reliant on Mr. Ghosn, a legend in the auto industry for rescuing Nissan from the brink of bankruptcy more than 15 years ago and deepening its alliance with Renault, which owns about 43% of Nissan.
Renault and Nissan engineers haven't always seen eye to eye on engine technology. At Nissan's shareholder meeting in June, a Nissan employee who was also a shareholder expressed mistrust toward the French partner, saying: "It feels like we are a wholly owned subsidiary of Renault."
Mr. Saikawa said the answer was for Nissan employees to be more assertive rather than waiting for "homework" from Mr. Ghosn, who remains head of the alliance.
"We should be the main driver of alliance growth and integration," Mr. Saikawa said.
He said that because he is Japanese, he believes he can more easily crack the whip on employees who drag their feet on working with Renault. "I can be a little more demanding to a Japanese guy, very tough and challenging to young Japanese talent," he said.
Speaking of Nissan's global employees, he said: "Sometimes they are very territorial. I need to kill this territorial mind-set."
Write to Sean McLain at email@example.com
(END) Dow Jones Newswires
September 08, 2017 02:47 ET (06:47 GMT)