Nissan Motor Co. will move Maxima production to its plant in Smyrna, Tenn., as part of a crash program to shore up profitability around the world.
The company said last week it will freeze investment in other markets and sell off real estate in Japan, including its headquarters, while putting more emphasis on North American operations.
Revising a forecast issued only one month ago, Nissan said it now expects to report a loss on worldwide operations of about $106 million for the fiscal year ended March 31, 1998. It had earlier forecast a profit of about $123 million.
Elements of Nissan's recovery plan include:
Trimming $7.4 billion from its debt load of about $29.6 billion within three years.
Cutting the number of models by 30 percent within five years. Build the remaining ones on 14 platforms by 2001 instead of 25 currently, and on 10 by 2003.
Raising $4.1 billion through the sale of real estate and securities. Nissan's headquarters building in the high-rent Ginza district may be on the block.
Reducing global inventories by $1.9 billion.
Implementing a $3 billion cost-cutting drive. One target is to trim $1,000 per vehicle from the cost of vehicles built at Smyrna, which already is counted as one of the most productive auto factories in North America.
Reduced costs will lower Nissan's financial break-even point to 1 million vehicles in Japan and 1.7 million overseas. In the fiscal year just ended, Nissan's Japan sales fell below 1 million for the first time in 26 years.
'These measures,' said Nissan President Yoshikazu Hanawa, 'are meant so we can survive through the 21st century.'
For the American market, Hanawa laid out several measures. These include:
'Aggressively' introducing new models, including an unspecified image leader.
Consolidating the Nissan Motor Corp. U.S.A. sales arm into the corporate umbrella company, Nissan North America Inc.
Reducing leases as a percentage of sales from between 30 percent and 35 percent currently to just over 20 percent.
Nissan's troubled American operation has lost money and market share. Combined Nissan and Infiniti sales so far this year are off 31.6 percent at 178,154.
Hanawa said he has no plans to change the automaker's Infiniti Division.
Slowing U.S. sales are beginning to cause trouble for Nissan's big U.S. manufacturing company. The flexible Tennessee car and truck plant has the capacity to turn out 450,000 vehicles a year. For the past two years, it has been building at closer to 400,000 vehicles a year.
But this year, as sales slump, the plant expects to build only 300,000. The plant has vowed not to lay off any of its 6,000 hourly employees, despite canceling Friday production and other scheduled workdays.
For the past several years, the operation has made money, a company spokesman said.
The decision to build the Maxima in Smyrna appears to demonstrate a new Nissan posture. Nissan's market troubles in Japan for most of this decade have made it skittish about moving more production out of Japan.
Nissan in 1995 became the only Japanese automaker to close an assembly plant in Japan when it shuttered its giant Zama complex in suburban Tokyo.
News of the Maxima decision took officials at Nissan Motor Manufacturing Corp. U.S.A. by surprise last week. They had been in talks about moving the Maxima to Smyrna, but the plan had not been made final.
A company spokesman said there has been no formal decision on when Maxima production will begin. But the shift most likely will coincide with the introduction of the next-generation model in 2001. That car will share a common platform with the Altima, which already is built at Smyrna.
With sales of 123,215, the Maxima outsold the Sentra in 1997.
The move will mean that the U.S. plant will see three new products. The new four-door Frontier pickup will launch in March 1999 and a new Frontier-based sport-utility will be launched in April 1999.
Smyrna is handing over production of the Sentra to Nissan Mexicana in Mexico.
WILL IT WORK?
Analysts were mixed in their assessment of the plan, which combined specific goals and timetables with vague generalities.
'It's a good plan. It's going to keep them above water,' said Peter Boardman, auto analyst with SBC Warburg Ltd. in Tokyo. 'But we'll have to wait to see whether or not it produces.'
He added that Nissan also unveiled a restructuring plan 'three or four years ago, and the company hasn't recovered.'
But some observers remained skeptical.
Said auto analyst Kaoru Kurata of Goldman Sachs (Japan) Ltd.: 'If Nissan could not make a profit in the U.S. market last year, they never will.'