Much of Nissan Motor Co.'s woes have been blamed on its North American operations. But North America has been the fastest to rebound, posting a profit for the year that ended March 31, following a $680 million loss last year.
As the outgoing president of Nissan North America Inc., Minoru Nakamura was largely responsible for rescuing the company here. On the eve of his 'retirement' to another post in the Nissan family in Japan, Nakamura spoke with Staff Reporter Mark Rechtin about the challenges Nissan faces in North America.
Where does Nissan North America stand now?
Our business reform plan for global and North American operations started last May, so fiscal 1998 (ended March 31, 1999) was the first year of a three-year plan. North America had a good first year as far as profit is concerned. With the series of new models that will begin arriving in June, combined with a tighter cost reduction plan, I have no concerns that Nissan North America will reach its fiscal 2000 goals.
But that's not the end of the story. Our mission to make a real turnaround is for Nissan to re-establish itself as a Tier 1 importer for both the Nissan and Infiniti franchises.
Our brand identity clearly is still in a weaker position than Toyota and Honda, but with the new products coming soon, and the Z car, that will enhance our brand identity back to normal. The Frontier will be greatly improved with a minor change in fall 2000, and the Maxima is so much bigger.
I think we're on the right track with new products in the pipeline.
You speak of Nissan North America making a profit. Is that a real profit, or making money through creative accounting practices, sales of assets and the like?
It's a real profit, but a small profit. We told analysts to expect a small negative figure for the year, but internally our goal was to break even, so we overachieved. I think that for fiscal 1999 we can make a reasonable profit in North America.
What other weaknesses does Nissan have?
The important thing is product. These days, our scores on the J.D. Power surveys and Consumer Reports reviews are much improved. Our real capability is very competitive, but we still have to make an effort as to how we're perceived. Our styling will begin to take care of that. When you look at Xterra and the new Maxima, we will enhance our already good reputation for performance.
Turnarounds are team efforts, but is there any one achievement about which you personally are proud?
Fiscal year 1997 was very painful for us. We took a big loss due to our remarketing costs. We learned a lesson, and we paid a lot of money for that lesson.
From that, Nissan North America produced an internal report that looked all the way to the early '90s. That collective report became the basis for the 'back to basics' strategy that I led. That strategy turned around our management style, improved our morale, our activities and our communications. It also showed that there is no magic to sales and marketing.
Tell me about your successor, Nobuo Araki.
I know he's a very reliable, capable, experienced businessman. He's very determined. He has five previous years at NNA. In 1996, he was my assistant. He speaks American English, while I speak a more European, or South African, sort of English.
What does Renault think of Nissan's North American operations?
They have not been here yet, but when I go back to Japan I will have a meeting with (new Nissan Motor COO Carlos) Ghosn, then I'll better know their perception. But I think they'll leave us alone. I think NNA making a profit this year has reinforced their decision.
Renault's chief designer (Patrick LeQuement) has already unofficially visited Nissan Design International, because he and (Nissan Design International President) Jerry Hirshberg already know each other. And that sort of communication will be a strength.
But I don't think you'll start seeing Renault designs appearing on Nissan products. We need to have distinctive differences.
What about Infiniti Division?
Our product concepts are going to be about 'casual luxury.' We will be increasing our products to five with a vehicle off the Skyline platform. Right now, we're selling 60,000 to 65,000 vehicles a year, but to be a Tier 1 luxury player, we need to be selling 100,000. With five products we can do that.
Nissan took a big loss from Mexican operations when the peso was devalued. By moving all Sentra production to Mexico, isn't that taking a bit of a risk?
Actually, our financial currency risk is reduced and leveled by exporting Sentras because the plant gets paid in American dollars. Interestingly, in some surveys, the Mexico plant has shown better quality in building Sentras than Smyrna.
Did taking that big remarketing write-off in fiscal 1997 take care of Nissan's lease exposure? Or is there still a danger lurking?
I don't think there's any explicit exposure because we established enough reserve. But markets change and used-car prices can go down or more vehicles might come back off lease than we expect. But I don't think any further adjustments will be necessary. We have a reasonable remarketing plan right now, and we've moved remarketing to Nissan Motor Acceptance Corp. to make sure we're on a conservative basis.
Were you surprised when Nissan told you it was time to retire from NNA? You seemed to have a particular grasp of Nissan's situation here.
I feel that a president should stay longer, but my two predecessors were here only two or three years, and I had been president for three years as well. I think it was more because of age. If I were younger, maybe I would have stayed longer. I came in at 54, and now I'm 57, so I guess I was a bit late.
This management shuffle is bringing in a new generation of executives, and many of my age are leaving. But I still can work physically and I hope mentally (chuckles), so now I'll be doing Nissan's domestic rental and lease business from the northern tip of the islands down to Okinawa. There are more than 200 branches all over Japan.
Are you going to miss America?
My children are living in Tokyo, so we'll get to see them more. My wife will miss California. She plays golf more than I do, and tennis, and has made lots of American friends.
I won't miss American food. I like Italian food back from when I was involved in a joint venture with Alfa Romeo in Italy. But here Italian food is too Americanized. And I only got one year of California weather because of El Nino.
Both my wife and I have switched our 'conversion buttons' back to Japanese. I'm only reluctantly speaking English today. But I'll be watching NNA's results. I did my job. Now it's up to them to achieve the mission.