CARLOS GHOSN, CEO, NISSAN MOTOR CO.

Ghosn: Nissan must raise the bar for design, quality

Automotive News: When will you decide on making Infinitis in Mexico? Carlos Ghosn: In the next two years. One of our most powerful manufacturing bases in the world is in Mexico, so it's possible one day we will make Infiniti [there]. But let's concentrate on what's already being engaged before going to the next step.
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YOKOHAMA, Japan -- CEO Carlos Ghosn is pushing hard to meet targets he set for Nissan Motor Co. as part of his Power 88 business plan that ends March 31, 2017: a global market share of 8 percent and an operating-profit margin of 8 percent.

But he recently had to trim his profit outlook for the current fiscal year, and then reshuffled top management to address what he called "soft" performance across the board. Among the changes, he promoted Jose Munoz to head North American operations to pursue the company's elusive goal of a 10 percent U.S. market share.

Ghosn, 59, spoke with Asia Editor Hans Greimel, Mid-South Bureau Chief Lindsay Chappell and News Editor James B. Treece about Nissan's image overhaul, its production plans and his thoughts on succession and management changes.

Q. What keeps you up at night when it comes to North America?

A. I think we have the fundamental things right in North America, particularly in the United States. Our main challenge in the United States is just to deliver on the investments we have made and are making. It took us some time, but I think finally we are getting the team capable of delivering, led by Jose Munoz in the United States. What keeps me awake is, are we going to perform exactly the way we said we would perform?

What convinces you that you have room for potential?

Every car manufacturer has to compare its performance to a group of likely competitors. When I compare [us] to Toyota and Honda, it's not to our favor.

We are leading the pack in some significant markets. But in the United States, the shortfall to the other two gives you an indication about how much potential there is.

What do you expect Munoz to do differently?

He's already doing a lot of things differently. But what I'm expecting from him, obviously, is to deliver the 10 percent [U.S. market share] milestone, and it's something I know he takes very seriously.

But it's not 10 percent in a way that is not sustainable. It's 10 percent as a milestone. Which means that after the 10 percent we're going to continue to grow.

You have identified product quality as a head wind. Is that a factor of slack internal quality or a matter of suppliers' not keeping pace with your expansion?

You always have both. There are some cases where part of the supply did not deliver what you wanted. But this, I'm not worried about.

The main problem is, are you putting the bar high enough? Particularly when it comes to the evaluation of a car. We have cars that seem to us very good, but when it goes to the market we don't have a good rating.

The question is then how come internally we considered it a good car but when it goes to the market, Consumer Reports or somebody else is saying, 'No, no. This is not recommended.'

You have to retune your own internal standards to make sure the people who are advising the consumer are happy with our product.

The influencer needs to be taken more into consideration when you are establishing your own standards.

You have singled out problems with your continuously variable transmissions. Did you discuss that with CVT supplier Jatco?

Sure. Every time you launch a new CVT, you always have some risk of problems. So we now have a process by which, before launching any new CVT, they come to the Nissan executive committee to explain what are all the measures they have taken to ensure that there are no surprises in the launch. We're changing processes.

We are on a long-term strategy of making this company a powerhouse in the auto industry. And the only way that is going to happen is that every time you have a bump you learn from it and you correct your processes.

What brand image do you aspire to for Nissan?

We are coming from a period of time when we were not innovating any more because we didn't have the resources to be innovating. We were trying to catch up on everything.

Today we are leading in many technologies. Look at electric cars. With the launch of the Infiniti Q50, we launched steer-by-wire. A new technology.

We are starting autonomous driving. Now all of a sudden everybody is coming with autonomous driving. We are leading the pack. Nissan has recovered its power to be a bold technological innovator.

How will you amplify that message?

That's the job of Andy [Palmer, global marketing and sales chief]. The problem is that you need to make sure you are explaining this to the consumer. We have put a lot of effort into developing the technology. Now it's time to put a lot of effort into explaining the technology.

Make it much more available and understood by the consumer.

It's about brand power. We want Nissan to be recognized for what it is. It is a technological powerhouse. It is an innovator in terms of concepts and products.

You've recently changed your management team to address what you've called softness in your performance. From the outside, it seems like a shuffling of positions among the same names. Operationally, what are you telling them to do differently?

There are a lot of differences.

First, we are moving from three regions to six. We think the regions are too big today. So [we are] splitting the Americas in two, splitting Europe and Africa also in two. And making sure China is a management committee by itself. It's something that goes beyond shuffling names.

Secondly, we are trying to have a division of the roles that is more clear between four key executives. It's a clarification of the organization, a clear definition of the roles and particularly more focus of our management on the regions.

When we look at the top management, one remarkable characteristic is the diversity of nationalities represented. But is there any concern that you need to pick a Japanese national as a successor in order to lead what is still a Japanese automaker?

We are the most diverse company among all carmakers. From the 100 top people, we have about 50 who are non-Japanese. And we have 17 different countries of origin for those 50 people. But at the same time, we have to make sure it is still a Japanese company.

You shouldn't forget your roots. I would like, when the time for a successor would come, for a Japanese to head Nissan. It's symbolic, and we have plenty of Japanese talent.

I want Nissan to continue to be seen as a Japanese company.

It's normal. At first you try to have somebody leading, being the symbol of the company, who would be Japanese. From time to time you can have a foreigner. But you cannot have a foreigner all the time.

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on Twitter


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