Since being named chairman of the Americas for Nissan Motor Co. two years ago, Carlos Tavares has overseen market share growth for the Nissan and Infiniti brands in the United States, Mexico and several Latin American markets.
At the start of this year, Tavares, 52, unveiled a campaign to shift more parts and vehicle sourcing away from Japan because of the yen-dollar exchange rate. Staff Reporter Lindsay Chappell spoke with Tavares recently at Nissan's U.S. headquarters near Nashville.
Q: In the United States, demand is coming back strong, gasoline prices are rising fast, and Japan is held back by problems from the March earthquake. Which of those three issues concerns you the most?
A: All three, because they converge on the same business.
Yes, the market is coming back, but it's not something that surprises us. It's aligned with what we have been saying. We are looking for 13.2 million industry sales on a fiscal-year basis, and there may be some upside in the second half of the year.
The gas price issue is a concern, and we've started seeing some mix shift. But I think the reaction of consumers is not as brutal as it was at the peak in 2008 because the increase this time has been more progressive.
I think we will face more mix shift in the United States -- more than we predicted. It's something that we'll need to adapt to, and eventually we'll have to adjust our production scheduling to manage it properly.
The third factor is, of course, Japan. On that front, we intend to be competitors and fight to recover. We are in the ramp-up phase of doing that, and we want to come back to normal operations perhaps by early June, which is a big contrast with what you're hearing from others.
We have a bunch of experts in our supply chain whom I consider among the best in the industry. We have a team who understands that if we have to uncover problems we don't know today, the only way to uncover them is to rev up. If you don't rev up, you don't see the problems. Are we going to face surprises? Maybe. But our mind-set is the sooner we face them, the sooner we will solve them.
That puts some pressure on your suppliers, some of whom are still rebuilding from the 2009 crash. Might you want to run your factories at a 14- or 15-million-unit industry pace in the second half of the year to catch up, but your suppliers tell you they're not up for that challenge yet?
It's a great question. And the answer is not black or white. In this industry, you may have objectives that are unrealistic and that disrupt the ability of the supply chain to support you. But you can also have self-fulfilling prophecies, meaning that if you don't try, you don't get. So our job will be to find the appropriate level of stretch that's going to pull the supply chain to the level we need.
I don't think we'll run at the 15 million level this year. We might have months in the high 13s. That may happen. But let's not forget that for many of our suppliers and our own manufacturing plants in the United States, we were running in the 16 million and 17 million range not so long ago. And unlike some others, Nissan didn't cut capacity.
For the past few years, market share has steadily increased for Nissan and Infiniti combined. What do you expect this year?
If you look at the market share growth of Nissan over the past years, it has been almost linear -- between three- and five-tenths of a point of share per year. And that's what we will continue to do. FY 11 will be a continuation of FY 10 for us.
With the obstacles Nissan, Infiniti and other import brands face because of the earthquake, how will you keep the domestic brands from recapturing some of the market share they have lost in recent years?
There is not so much cross-shopping between us and the U.S. brands. We are still very much cross-shopped with the two other Japanese. But it's not impossible that on a short-term basis you may see some market share variations because of the impact that the earthquake has in the minds of people. Monthly bumps may happen. But we need to judge on a full fiscal-year basis.
One interesting thing is that if you look at the incentive spending for April, the industry is going down -- significantly down, which is healthy for everyone. Everybody will be seeing better profitability. Pricing power will be sustained. To a certain extent, it also puts us in a better situation because we won't be putting incentives on cars that we won't have.
How much of your market share growth over the past two years came from the disappearance of some of the domestic brands, especially Saturn?
Not very much, a marginal amount. I suppose there is a lot of cross-shopping within the U.S. brands, for sure. But for us, it's still very much the Japanese 3.
The launch of the electric Nissan Leaf has been slow, and Nissan has been criticized for it. A few weeks ago in New York you said that you will accelerate deliveries this spring and summer. Was that an effort to get things back on track, or are you hoping to take advantage of rising gasoline prices?
It was not a reaction to any criticism or a reaction to any frustration. I have said this before: that we just try to do what we say we're going to do and do it properly. We've said that there is no specific ambition to make a fast ramp-up. What would be the purpose of that? What counts when you have a game-changer like the Leaf is that you succeed in giving people the best possible experience.
Our commitment was to deliver the first cars in December 2010, and we did that. We never committed that we would be delivering x-thousands or x-hundreds in 2010.
We started the ramp-up in December, and that went very smooth. Then there was a period related to the earthquake that stopped things.
My message in New York was to say that we are back on and we have the production ramp-up we had planned, and now we're going to deliver the cars.
Are you thinking there could be more potential than you originally envisioned for hybrids and electric vehicles in this market, given the upward trend in gasoline prices?
You have to put this in some perspective. Three or four years ago people compared EVs to golf carts. Since then, there has been the prediction that EVs will be 10 percent of the market by 2020. And now some guys have changed their minds and announced EVs. And each time somebody speaks, the prediction is more bullish than the previous guy.
We made a strategic decision -- some people called it a bet -- to be a leader in something that cannot be overtaken, which is "zero." Once you are at zero emissions, you stop competing on the performance. You compete only on the cost of the technology to achieve zero.
Because we want to be leaders, we made an investment that gives us a capacity for 150,000 vehicles, in this specific market, by late 2012. So now we'll see what the market will say. It will take some time for the sales to grow. But any external factor that makes the consumer more sensitive to this matter, of course, may help us.
You've also opened up online reservations for the 2012 model Leaf ahead of schedule.
The No. 1 concern has been customer experience, not the number of cars, and that's the reason we kept the reservations closed until now. Even internally, people were challenging me to open reservations sooner. I said, "No, we'll reopen the reservations when we have full visibility of our ability to deliver cars to the people who already ordered them." Now we have that visibility and we're moving ahead.
The new Infiniti Hybrid M uses Nissan's homegrown hybrid technology. When will we see other hybrid applications?
You will see more. I prefer not to tell you when, but you will see more, and it's going to come reasonably soon.
In the next year?
Perhaps a little bit longer, but not much. You'll see more.
You beat out Ford for the contract to be the exclusive supplier of all taxis in New York. How significant is that?
This is going to give Nissan not only visibility but also high credibility.
The model is the NV200 commercial van, which you were already planning to offer as an electric vehicle. Does this mean electric taxis for New York?
That makes sense. If you want to improve the quietness in New York and improve the quality of the air, there is no reason to exclude that.