Next April, Carlos Ghosn will move back to Paris from Tokyo to become chief executive of both Renault and Nissan. As if to emphasize that he is not truly leaving Nissan, he will unveil his next three-year plan for the Japanese carmaker shortly before his move. It will be called Nissan Value-Up and will set ambitious targets for the company, just as his two previous plans, the Nissan Revival Plan and Nissan 180. Last April, Ghosn also took direct control of Nissan's North American operations, which have been hit by quality problems and an unrelenting incentives war. Ghosn discussed Nissan's problems and outlook with Automotive News Europe's James B. Treece and Yuzo Yamaguchi in Tokyo.
You've received numerous accolades for what you have done at Nissan. Of the things you have done, what are you personally most proud of?
The thing that was the most dangerous in 1999 was the fact that the company had lost confidence in its future and it had lost confidence in its ability to do much better than it had done in the 1990s.
If I can say something that nobody can take away from me, it is that I was the president when this company re-established its confidence in its future and its confidence in itself. This is my biggest achievement. This is something that historically will stay.
When you came to Nissan, the company's weaknesses were fairly easy to measure in terms of global market share, production volume, profitability and debt. Today, what are the weaknesses that are easiest to measure?
You are talking about a company that's growing steadily by 10 percent a year with a very high level of operating margin -- more than 11 percent last year, more than 10 percent this year in our forecast. A company that completely eliminated debt.
Talking about weaknesses is a little bit excessive.
Where is there room for improvement?
We have plenty of opportunities for improvement. Some of them are in quality. We are still too slow in many areas of the company, and we are addressing it. We are working on time reduction, going through all the processes of the company and trying to eliminate everything that is late, everything that is slow.
Third, we have benefited from an enormous drive within the company over the last four or five years because we wanted so much. We want to make sure this continues. This is more a risk, I would say, than a true opportunity. We need to continue the drive. We need to continue to act as if we were on the brink of bankruptcy, which was the objective situation we were in, in 1999.
You have raised US sales forecasts and downgraded European estimates under the Nissan 180 plan, expecting extra sales increases of 360,000 in the US from the fiscal 2001 level. Why?
When we announced Nissan 180, we said we would sell 1 million additional units, so that by September 2005 we should be at 3.6 million cars sold globally.
The market in GOM [global overseas markets, or those outside of North America, Europe, and Japan] has been overall better than what we thought, particularly because of China.
The market in Japan has been more depressed than we thought. And the market in Europe has been not as good as we thought.
We said we are reconsidering the contributions to the 1 million. We think the US will contribute more, GOM will contribute more, Europe will contribute less and Japan will contribute less. But the total will still make 1 million additional sales.
Analysts say that the Infiniti has not established itself as a flagship brand in the US. Do you agree?
We are very confident that with time, with the practices that we are putting in the US, even the most critical or skeptical of the analysts will recognize that it is a flagship. We see it already in the profit numbers.
As you enter new markets, with different market requirements and segments, are you going to have to develop Infinitis beyond what the US has seen?
They may be developed -- there are a couple of cases coming -- with other markets in mind. But they will be offered in the US market.
What are your medium-term volume targets for Infiniti in the US?
We're going to announce the Infiniti targets in April when we launch Nissan Value-Up. You're going to have significant growth of Infiniti, not just 5 or 10 percent, but significant.
Will it be so much that you have to start worrying about having too many to maintain a luxury image?
No. It's not going to become a mass-luxury brand. I may have other concepts, but not this one.
In October 1999, when introducing the Nissan Revival Plan, you said that Nissan's "brand deficiency" meant that Nissan cars sold for $1,000 less in America than a totally comparable car from competitors, and for E700 less in Europe. You targeted eliminating the differential completely over the next decade. Where does that stand now?
We are in good shape. We are in good shape not so much because we have been particularly virtuous, but because the others today are giving so much in the incentive game that the gap reduction is much easier and much faster than we thought.
How do you measure brand power?
Real pricing, not [list price] but transaction price. And today, transaction prices are going much better. You can measure it by the fact in 1999 Nissan was one of the most active car companies in terms of incentives and you could see it in the residual value of our cars.
Today we're one of the most conservative companies in terms of incentives and the resale value of our cars, compared with our competitors, has shot up. The brand is getting much more attractive, and you can measure it by price differential.
But you're not ready to declare victory there yet?
No. It's a 10-year effort. We're going much faster than we thought, not so much because we're doing a great job, but we are benefiting from the fact that so many people are willing to give up some of their brand power for short-term growth of the market.
What is the key for Nissan to improve its quality in the US?
I think there are two things. We have to probably do a better job in the advanced phases of development, not during the development of the car.
We are, by the way, reconstructing our processes to be much more effective. Having the suppliers involved very early. We can do a better job into the advanced phase of development, particularly better coordination between the different engineering entities and better coordination with our suppliers.
The second point is to introduce more check and control, particularly when we have innovative products coming to the market
You've been in charge of North American operations since April. What is your top priority there?
This is the No. 1 challenge: progressing the company, progressing the brand, strengthening the brand. Selling the products because of their attractiveness, because of their competitiveness and not because they are the best deal in town.
Obviously it's a tough challenge. But so far the results speak for themselves. Our forecast for 2004 is that we are going to increase our market share. We were on average 5 percent in 2003. We're going to be above 6 percent in 2004.
Are you confident that Nissan will have better scores in the J.D. Power report for the 2005 model year?
I am confident. I've gone through all the measures that have been taken.
I have examined car by car to see what was going wrong. I am confident that our customers will be satisfied with our product. How much? I would wait for the customers to express themselves.
Between the new Cube and the Tiida, which do you think would fit the US market better?
There is going to be a lot of speculation about which car will go. We have many cars below the Sentra today in our global offerings.
And we have many coming. This is a bread-and-butter segment in Japan. It's very big in Europe. It's very big in China. Having a car is not the problem.
The problem is, what is the car that from the beginning you are going to design in a way to be successful in the US market.
What is your vision for the role of Nissan Mexicana in the coming years? Is it going to remain simply a producer of a couple hundred thousand vehicles mainly for the Mexican market or does it have a broader regional role?
I think for the moment the role of Mexico is going to remain what it is today. Why? To grow the role of Nissan Mexicana, there is one very important condition that is not fulfilled today. You have make sure that your supplier base in Mexico is very competitive.
Particularly in a country like Mexico, which is supposed to be very competitive and extremely efficient, your end-value should be competing with some emerging countries like China or Thailand or other countries that fancy themselves as global manufacturers.
Today, the end-value in Mexico is much higher than the end-value that we have in China or that we have in Thailand.
We're not the only ones saying this. I think even the Mexican government is aware of the fact that it lacks competitiveness compared with China or compared with Thailand.
What are you proudest of?
I was president when this company re-established its confidence.