Ghosn charges ahead on Nissan's market share, EV goals
AUTOMOTIVE NEWS: How worried are you that the EV gambit will tarnish your legacy?
CARLOS GHOSN: People love the EV. The only concern about the EV is whether it’s a drag on profitability. But, obviously, when you look at Nissan’s results, it’s not a drag.
Photo credit: BLOOMBERG
YOKOHAMA, Japan -- Nissan Motor Co. CEO Carlos Ghosn is chasing ambitious goals under his current business plan: a 10 percent market share in the United States and 8 percent globally by 2017.
But things aren't going as planned. The company's U.S. market share hovered at just 7.9 percent for the first 10 months of 2012, down from 8.2 percent in all of 2011. Also, Nissan's bet on electric vehicles seems to be losing momentum. U.S. sales of the Leaf EV slid 16 percent to 6,791 through October, far short of the full-year target of 20,000.
Still, Ghosn is looking to add production capacity in North America to make sure supply can back his growth plans.
Ghosn, 58, spoke with Asia Editor Hans Greimel at Nissan's headquarters here.
Q: Will the downturn in Europe and the anti-Japan backlash in China impact the U.S. market recovery?
A: No, I don't think so. The recovery in the United States is in good shape. The forecast for the year in the U.S. market is strong. Nobody is foreseeing even stagnation for next year, even though the growth may not be substantial.
What is your outlook for slowing growth in China and how the anti-Japan backlash there will develop?
Obviously, there is a slowdown of growth in China. We knew that when a car market is growing 20 percent or 25 percent a year, this will not last forever.
Still, I'm personally optimistic about the fact that the Chinese market is going to continue to grow. When officials are talking about 7.5 percent GDP growth for the next four to five years, that's very reasonable.
It's reasonable because there is still so much room for growth in the internal market. And the finances of China are very healthy. There's practically no debt; there is very little deficit. China has the power whenever necessary to put more stimulus into the economy.
A 5 percent growth or 6 percent growth in the car market would be great because it's still more than 1 million cars a year.
And the anti-Japan backlash among Chinese consumers?
The backlash because of the political relationship between Japan and China is much more worrying. First of all, it's not under your control. There is nothing you can do, except lobby here and there that reason will prevail.
We're seeing showroom traffic little by little coming back. Slow, but it's coming back. I'm not expecting anything normal before the year 2013.
You want 10 percent of the U.S. market, but your market share is around 8 percent. What's holding you back?
When we compare ourselves to the best companies in the United States -- every single item in terms of brand power, dealer efficiency, marketing efficiencies -- we are still not at our potential.
We can be at a much higher operational performance level. When we approach this level, we should be even more than 10 percent market share.
I'm optimistic. We not only have investments in product; we are also investing in our efficiency of sales and marketing.
So you still expect to achieve that 10 percent by 2017?
Oh, yeah -- hopefully before. I'm not going to give you a date. If you start giving dates on the short-term, the sales objective becomes the main objective and people forget about customer satisfaction.
We're going to take the time to do it well, to do it in a way that is sustainable, where 10 percent is not a reach.
What are your doing to relieve production constraints in North America?
We have some significant investment taking place today in Mexico to increase the capacity. There will hopefully be more to come in the future.
Within the 2017 timeframe?
Yes. We're freeing capacity. Today, part of the capacity in Mexico is being used for Brazil. We are building a Brazilian plant, which will come into production in 2014, which is going to free the Mexican capacity, which is now going to be made available for North America.
But whenever we reach 10 percent market share in the United States and hopefully the same kind of market share in Canada, and we continue and maintain our leadership in Mexico with 23 to 25 percent market share -- I think we're going to need more capacity.
What plans do you have for making more Infiniti vehicles in North America?
There is no doubt about the fact that more and more Infiniti products will be done outside Japan because today the yen is a drag on the competitiveness of Nissan and particularly on Infiniti, where we are too dependent on Japanese production.
Japanese production is very high quality, and we like our base in Japan, except the fact that with the yen at 80 yen to the dollar, it is very difficult to compete.
Which means you are going to see more and more Infiniti production outside of Japan. North America is one potential, but it is not the only one. Probably Asia outside Japan can be another.
Do you need a dedicated Infiniti factory in North America?
I don't think today we need it. What is important is to have lines which are dedicated to Infiniti within an existing one. That would be sufficient.
Is Mexican quality control good enough to build Infiniti there?
Mexico is a great base for reliable and high-quality cars. We can see it all the time with the performance of our Mexican plants. Yes, it may also be a base.
Does Infiniti need a halo car, and have you green-lighted one?
I think one of the main handicaps today of Infiniti is probably the fact that we are too dependent on Japan. And our main priority today is to balance more our supply chain of Infiniti products to reflect, in a better way, where we are selling those products.
We feel very good about the new products coming. There is a lot of innovation, strong design, strong achievement. So you're going to see a new generation of cars coming that really positions Infiniti at the level showing that we want to be in the top tier of competitors.
Do we need to add more cars? I would say our first priority is making sure that the cars we produce have enough sales before adding more cars. What I would like is our global dealer network of Infiniti to concentrate on selling well the cars that we already produce before going for enlargement and more halo cars in the future.
Our objective is 10 percent market share of the premium market. We cannot make Infiniti out of a bunch of cars [each] selling a little bit of units. You can't do that. Every strong brand has to have one or two strong cars selling very well, competing very well in their segment. This is the first and most important thing to do.
What role will the Infiniti LE electric car play?
Zero emissions, for me, is here to stay even though it's not selling as well as we thought.
You're going to see more and more zero-emissions cars. And this is totally normal, that we have at least one Infiniti car.
It's obviously a flagship car, but it's also a car that will be developed and produced to sell.
Are you concerned that you may have overinvested by rolling out global capacity for hundreds of thousands of EVs and their batteries?
I don't think so because our investments today correspond to about 500,000 cars a year. We feel very comfortable in the potential for at least 500,000 cars a year. We're following carefully what's going on in China. We're following very carefully the new incentives that are in France to encourage electric cars. No matter what, the United States is going to have to embrace electric cars in a way that is more sustainable. Japan is already doing it.
No, we don't think that we overinvested in this.
Are you on target to reach your stated goal of 1.5 million cumulative EV sales by 2015 for Nissan and Renault combined?
Let's not forget we're talking about the alliance performance. This is with four Renault cars, the most important one starting to sell at the beginning of 2013. So we haven't started the mass marketing of the Renault car, which is the Zoe. On top of this, we're opening a lot of doors for the Leaf. We're becoming more competitive with the Leaf and putting our act together.
It's too early to say.
You can reach Hans Greimel at firstname.lastname@example.org. -- Follow Hans on