Nissan Motor Company Ltd.

founded: 1933

Contact Information:

headquarters: 17-1 ginza 6-chome, chuo-ku
tokyo, 104-8023 japan phone: 81-3-3543-5523 fax: 81-3-3546-2669 url: http://www.nissan-global.com

OVERVIEW

Nissan Motor Company Ltd., the third largest automobile manufacturer in Japan behind Toyota and Honda, produces 2.6 million vehicles annually that are sold in more than 190 countries around the world. Its product line includes the Maxima and Sentra mid-ranged passenger cars, the upscale sedans Altima and Infiniti, Frontier trucks, and Pathfinder and Xterra SUVs. With plans for 22 new models to hit the market between 2000 and 2005, consumers can expect to see a new and expanded product line. Nissan has also diversified into a variety of nonautomotive industries, including aerospace, marine, and textile equipment production and financial and real estate services. Headquartered in Japan, Nissan maintains regional offices in the United States and The Netherlands. Marketing and sales operations are conducted through 172 national sales offices and an extensive network of over 7,700 automobile dealers worldwide.

Experiencing financial difficulties since the early 1990s, the company managed to make a net profit in fiscal year 1996, but posted net losses for the following three fiscal years. By 1999 the company was faltering and in desperate need of a financial boost. Although DaimlerChrysler showed interest in acquiring part of the company, the French automobile maker Renault stepped up first and purchased a 37-percent stake in Nissan, making it the majority stockholder.

As soon as the stock purchase was completed, Renault instigated the appointment of Carlos Ghosn as the new head of Nissan. Known for his ability to cut costs effectively, Ghosn undertook a series of measures to stop the financial drain. He closed outdated plants, laid off employees, and abandoned suppliers who refused to renegotiate high prices. He also helped the company develop a comprehensive three-year reorganization called the Nissan Revival Plan. With the new influx of cash and under the strong leadership of Ghosn, results began to materialize quickly. The company posted net gains in fiscal 2000 and during the first half of fiscal 2001. In March of 2002 Renault increased its share of Nissan from 37 percent to 44.4 percent, and Nissan announced intentions to purchase a 15 percent interest in Renault.

COMPANY FINANCES

Fiscal 1999, ending March 31, 2000, was a plainly terrible year for Nissan. The company posted a net loss of ¥684.4 billion. ($5.7 billion; based on an average exchange rate of ¥120 = $1.) Nissan had posted losses, albeit less substantial, in fiscal 1998 and fiscal 1999 of ¥14 billion and ¥27.8 billion, respectively. In fiscal 2000 the numbers began to turn around, with the company generating a net income of ¥331 billion on revenues of ¥6.1 trillion. During the first two quarters of fiscal 2001, the company continued to post profits. Net sales for the period totaled ¥3 trillion ($24.8 billion), representing a decrease of 1.4 percent from the same time period of the previous year. Despite the slight decline in overall sales revenues, Nissan was able to post a net income for the first half of fiscal 2001 of ¥230.3 billion, an increase of nearly 34 percent year-on-year. The company was also able to reduce its debt load by ¥154 billion to ¥799 billion. This represents a significant decrease in debt from the debilitating amount of ¥2.3 trillion the company held in 1997. Stock prices, which closed in October of 1994 at $15.83 per share on NASDAQ, had fallen to $4.52 per share by October of 1998. After the announcement of the Renault deal, stock prices began to slowly creep back up, reaching $14.96 per share by close of March of 2002. Net income for fiscal 2001 was expected to be approximately ¥330 billion.

ANALYSTS' OPINIONS

Clearly Renault's influx of cash helped revitalize Nissan's prospects for the future. Analysts describe the deal as pulling Nissan "back from the brink," and Ghosn likened the scenario to moving out of the operating room into the recovery room. The introduction of a new sub-compact model at the beginning of March, a weak yen, positive U.S. sales, and a promising outlook from Ghosn prompted investors to take notice. By April of 2002 Ghosn's strong leadership combined with consistently improving bottom-line numbers finally began to convince analysts that Nissan's turnaround might be real. Although the company faces ongoing challenges, including a weak Asian economy, the company's progress toward financial recovery has garnered considerable praise from the analysts.

HISTORY

In 1911 Masujiro Hashimoto, a U.S.-educated engineer, founded the Kwaishinsha Motor Car Works in Tokyo. In order to finance the production of the first Japanese car, Hashimoto took on three investors. Using the initials of their last names, Hashimoto named his creation DAT. The second model introduced was referred to as a Datson, meaning "son of dat." In 1926 Hashimoto merged his company with fellow Japanese automaker Jitsuyo Jidosha Seizo Company to create the Dat Jidosha Seizo Company. The company changed hands in 1931, but the name Datson stuck, although the spelling was changed to Datsun in 1932. The following year the company's name became Nissan.

FAST FACTS: About Nissan Motor Company Ltd.

Ownership: Nissan Motor Company Ltd. is a publicly held company that is traded on the Tokyo, Frankfurt, and NASDAQ Stock Exchanges.

Ticker Symbol: NASNY

Officers: Yoshikazu Hanawa, Chmn.; Carlos Ghosn, Pres. and CEO; Itaru Koeda, EVP; Hisayoshi Kojima, EVP; Norio Matsumura, EVP; Thierry Moulonguet, EVP and CFO; Nobuo Okubo, EVP

Employees: 30,750

Principal Subsidiary Companies: Nissan's numerous subsidiaries include Nissan Capital of America Inc.; Nissan Design International; Nissan Motor Acceptance Corporation; Nissan Motor Company USA; Nissan Motor Manufacturing Corporation USA; Nissan North America Inc.; and Nissan Textile Machinery Corporation.

Chief Competitors: Nissan battles all major automobile manufacturers for a piece of the automobile market share. In the United State competitors include General Motors and Ford. In both the Japanese and U.S. market, Nissan competes with Honda and Toyota.

Sales of the Datsun were not exceptional in Japan during the 1930s because Ford and General Motors, who had already established production facilities in Japan, dominated the market. During World War II Nissan operated under government orders to cease production of passenger cars to produce trucks for the war effort. After the war ended it took several years for the company to rebuild its business as the entire nation of Japan struggled to recoup from the devastation of the war.

By the mid-1950s with sales still slow in Japan, Nissan became increasingly convinced that its future lie in exporting its small, inexpensive cars to the United States. After an unsuccessful attempt to contract with several American auto dealers, Nissan decided to create its own U.S.-based company to market and sell its product. In 1960 Nissan Motor Company U.S.A. had 60 dealerships within its organization and annual car sales of 1,640 units. The Datsun pickup, one of the first small trucks on the market proved particularly popular. The success of the pickup was followed by the introduction of the 240Z to the American market. By 1975 revenues topped $5 million.

During the 1980s Nissan expanded its production facilities into Italy, Spain, Germany, and the United Kingdom, and in 1981 changed the name under which it conducted business in the United States from Datsun to Nissan. New luxury models were introduced to the company's line of affordable passenger cars, and Nissan invested heavily in research and development of advancements and technological innovations. In 1989 Nissan introduced its top-of-the-line Infiniti luxury sedans.

During the 1990s the Asia economy became increasingly unstable. An increase in the value of the yen made export to the United States costly. As a result, Nissan could no longer compete with success against U.S. automakers. At the same time, U.S. manufacturers were increasing production, decreasing costs, and improving efficiency. Because its pockets were not nearly as deep as Toyota's, who could sustain a larger economic hit without undermining the company's viability, Nissan began to lose its financial footing. The company posted a net loss four out of five years between 1995 and 1999. However, after Renault purchased a substantial interest in the company, Nissan's fortunes began to turn, posting a net profit in both fiscal 2000 and fiscal 2001 as well as significantly reducing the company's debt load.

STRATEGY

The three-year Nissan Revival Plan, instituted in 1999, set out three basic promises for change: return to net profitability in fiscal 2000; achieve a minimum operating income to sales margin of 4.5 percent by fiscal year 2002; and reduce consolidated net automotive debt to less than ¥700 billion by fiscal year 2002. Upon enacted of the plan, the company's executive company guaranteed fulfillment of all three goals by the specified date, or they promised to resign. To drastically reduce operating costs, Nissan made significant reductions in jobs. Managers were also instructed to request that suppliers reduce their prices by 20 percent over a three-year period or face losing Nissan's business. In tandem with cost-cutting measures, Nissan began moving toward a goal of introducing 22 new models to its global markets.

CHRONOLOGY: Key Dates for Nissan Motor Company Ltd.

1918:

Kwaishinsha Motor Company in Tokyo introduces the Datson, a two-seat sports car

1932:

Name is changed to Datsun

1933:

Company is renamed and incorporated as Nissan Motor Company

1951:

Becomes a publicly traded company

1958:

Nissan enters the U.S. market by establishing the Nissan Motor Company U.S.A

1975:

Revenues top $5 million

1981:

Changes name of U.S operations from Datsun to Nissan

1992:

Posts a pre-tax loss for the first half of 1992 of ¥108.1 billion

1999:

Posts a net loss of ¥791 billion for the fiscal year; Renault buys a 37 percent interest in the company; Carlos Ghosn is named chief executive officer

2000:

Company restructuring under the Nissan Revival Plan leads to a net income of ¥187 billion for the fiscal year

2001:

Posts a net income for the second year in a row

2002:

Introduces to the Japanese market the Moco, the company's newest minicar

Reducing its overhead and expanding its product line is the major focus of the company's reorganization. Within the context of completing those tasks, Nissan is also pushing to enhance the Nissan image, increase efficiency at all facilities, and develop and implement new technologies that make the company's vehicles more attractive to consumers by providing convenience and safety as well as being ecologically sound. With completion of the Nissan Revival Plan well underway, the company planned its strategy for the years beyond 2003. The three areas of focus are growth, profitability, and debt reduction. The post-Revival plan calls for production of units to grow by 1 million by 2005, fueled by the planned addition of 22 new models by the same year. Sustained profitability is vital to the company's longterm financial health, which will be based on increased volume, quality vehicle selection, competitive pricing, and a cooperative economy. Finally, Nissan plans to eliminate its debt by 2005.

INFLUENCED

The most substantial influence on Nissan's financial position is the general state of the world economy. As a global player in a heavily competitive market, Nissan's profit margin is affected by upswings and downturns of national and regional economies. Unfortunately for Nissan, its own economic homeland of Japan has suffered a long period of recession. With no end in sight for the foreseeable future, decreased car sales in Japan continues to adversely affect Nissan. As the United States emerges from a recessive economy there is hope that it will be the bright spot for improving sales figures. Another factor, also uncontrollable, that directly affects Nissan's business is the exchange rate. In the first few months of 2002, the value of the yen dropped to ¥135 per dollar. However, a weak yen is a double-edged sword. Although a weak yen provides an exchange rate that translates into increased profits for Nissan, the situation also points to the continuing weakness of the Japanese economy.

CURRENT TRENDS

Even accounting for Nissan's no-less-than-spectacular recovery, in its home market it continues to lag well behind the results it posted during its peak in the 1970s, at which time it commanded more than 33 percent of the Japanese car business, compared to 18 percent in 2000. With U.S. sales accounting for approximately three quarters of Nissan's revenues in fiscal 2001, the company continues to work to expand and strengthen both its domestic and U.S. market shares.

Nissan launched seven new models in Japan in 2002. Three new models were aimed at first times buyers: the Moco, representing the company's entrance into the minicar market; the March, a new compact; and a remodeled version of the compact Cube. Nissan, who is getting into the minicar sector late, behind by Honda and Toyota, received a positive response to the introduction of the March in Japan, where minicars and subcompacts are hot sellers. Within three weeks of its launch on March 5, 2002, Nissan sold 40,000 March models, and monthly sales are targeted at 8,000 units.

PRODUCTS

Nissan produces numerous models within various product lines under a variety of names depending on the market. Sedans include Sunny (Sentra), Cima (Infiniti Q45) Cefiro (Maxima QX), Primera, March, and Cedric. The sporty line includes Skyline GT-R, Skyline, and Silvia. Trucks, SUVs, and minivans include Datsun (Frontier), Terrano (Pathfinders), Quest, and X-TRAIL. The top five sellers in Japan in 2000 were the Cuba, Serena, March, Sunny, and AD Van. In North America top sellers in 2000 were the Ultima, Maxima, Sentra, Frontier, and Xterra. Top sellers in the European market in 2000 were the Micra, Almera N16, Primera, Almera N15, and the D22 pickup.

With 22 new models promised by 2005, consumers can expect to see Nissan's product list change substantially. On April 10, 2002, the company introduced its newest minicar, the Moco, named after the Japanese "mokomoko," an expression of a warm and cute feeling. Scheduled to arrive on the North American market in 2003 are three new models: the 350Z, a remake of the classic 1970s sports car; the Frontier Open Sky, which offers a convertible feature to the SUV; and the Murano, a stylist hybrid car/SUV built for the urban driver.

GLOBAL PRESENCE

Nissan is headquartered in Japan with North American and European regional offices located in the United States and The Netherlands respectively. Seven domestic manufacturing plants operate in Japan, of which four assemble vehicles, and three produce engines and other major components. In North America, Nissan has an operational presence in the United States and Mexico including production and research, design, development, and testing facilities. In Europe production facilities are located in the United Kingdom and Spain. The United Kingdom and Germany are home to design and technical centers. In Asia Thailand and Taiwan are home to production facilities, with assembly plants located in China, the Philippines, Malaysia, and Indonesia. African assembly facilities are located in Egypt, Kenya, and Zimbabwe, and a production plant operates in South Africa. Nissan's Middle Eastern presence includes two assembly plants in Iran. The company maintains consumer finance operations in Japan, the United States, and Canada.

Nissans markets its vehicles in approximately 140 countries around the world. Of the 2.65 million units sold in 2000, Japan accounted for the sales of 861,411; the United States and Canada accounted for 662,501; and Europe accounted for 548,292. The remaining units were sold in other regions. Of the total production of 2.65 million units, 1.53 million were produced in Japan; over 279,000 were produced in the United States; more than 276,000 were produced in the United Kingdom.

ON THE CUTTING EDGE

Nissan is on the cutting edge of advanced technology in automobile design and equipment. For example, the Nissan Cima (marketed as the Infiniti Q45 outside Japan) introduced the world's first lane-keeper technology. The lane-keeper system helps a driver stay in the correct lane under normal driving operation. The system also assists the driver in keeping the car running true on a stretch of highway where direction may be influenced by such factors as banking or crosswinds. The X-TRAIL, Nissan's new SUV introduced to the Japanese market with success, offers advancement in the four-wheel drive system. The vehicle operates under normal driving conditions as front-wheel drive, thereby reducing fuel consumption compared to the standard rear-wheel four-by-fours. When roads become rough or slick, the electronic sensor equipment automatically shifts the vehicle into four-wheel drive.

CORPORATE CITIZENSHIP

As a global citizen, Nissan works continually to develop and improve its products and manufacturing process to be as ecologically friendly as possible. Nissan was the first automobile manufacturer to install systems to recycle chlorofluorocarbons and hydrofluorocarbons at all its U.S. dealerships and was one of the first in the industry to stop using these harmful substances. The company has been honored by the U.S. Environmental Protection Agency twice, receiving the "Best of the Best" award for efforts to protect the ozone layer as well as the 1999 Climate Protection Award. Goals of the Nissan research and development team include creating a zero-emissions vehicle and developing a viable fuel cell system by which a vehicle could function on electrical power. Nissan also supports programs that encourage used vehicle recycling. To focus its community involvement, Nissan set out three basic priorities: fostering the imagination of children, nurturing creativity with respect for diversity and promoting a better understanding of environmental protection. To that end, the company sponsors and supports a wide array of nonprofit organizations.

SOURCES OF INFORMATION

Bibliography

burt, tim. "nissan motor plans design centre in london." the financial times, 1 march 2002.

ibison, david, and tim burt. "renault's nissan deal begins to come up trumps." the financial times, 17 october 2001.

"infiniti vehicles receive telematics technology." company press release, 29 march 2002. available at http://www.nissanglobal.com.

kepos, paula, ed. international directory of company histories. vol. 11. detroit: st. james press, 1995.

"nissan announces 187 billion yen record half-year operating profit." company press release, 18 october 2001. available at http://www.nissan-global.com.

nissan motor company ltd. global home page, 2002. available at http://www.nissan-global.com.

"nissan: saying sayonara. it's closing plants and cutting jobs at home—and facing little protest." businessweek online, 24 september 2001.

uniworld business publications inc. directory of foreign firms operating in the united states. new york: author, 2000.

For an annual report:

on the internet at: http://www.nissan-global.com

For additional industry research:

investigate companies by their standard industrial classification codes, also known as sics. nissan motor company ltd.'s primary sics are:

3537 industrial trucks and tractors 3711 motor vehicles and car bodies

3713 truck and bus bodies

3714 motor vehicle parts and accessories

6719 holding companies, not elsewhere classified

also investigate companies by their north american industry classification system codes, also known as naics codes. nissan motor company ltd.'s primary naics codes are:

327211 flat glass manufacturing

333924 industrial truck, tractor, trailer and stacker machinery manufacturing

336111 automobile manufacturing

336211 motor vehicle body manufacturing

336399 all other motor vehicle parts manufacturing

522298 all other non-depository credit intermediation