Nissan presses Jatco to end CVT glitches

TOKYO -- Nissan is sharpening its oversight of affiliated transmission supplier Jatco Ltd. in the wake of quality and customer satisfaction problems that have pinched the automaker's profits.

Launch-related glitches hampered Nissan as it rolled out a string of new models last year with Jatco continuously variable transmissions. Nissan also is expanding and adding plants around the world, and Jatco is hustling to keep pace.

Nissan CEO Carlos Ghosn says his team will be watching Jatco more closely. In an unusual step, Ghosn this year singled out Jatco by requiring it to explain how it will ensure customer satisfaction on any new technology it introduces.

"Every time you launch a new CVT you always have some risks," Ghosn said in an interview at his Yokohama, Japan, headquarters last month. "So we now have a process by which, before we launch any new CVT, they come before the Nissan executive committee to explain all the measures they have taken to make sure there are no surprises."

Next month Nissan will dispatch its most senior North American manufacturing and supply chain executive, Bill Krueger, to Jatco, in which Nissan has a 75 percent stake. He will become executive vice president overseeing the Americas region and chairman of its operations in the United States and Mexico. His predecessor, Tomoyoshi Sato, will return to Japan for a new assignment. Another problem has been customer perception. According to Jatco CEO Takashi Hata, some Nissan owners are not yet comfortable with the way Jatco's fuel-efficient continuously variable transmissions operate. Nissan's entire small-car strategy is based on Jatco's CVTs, and most Nissan vehicles now have one.

Jatco's innovations in CVT performance in friction reduction and operating efficiency have helped Nissan cars rise to the top or near the top in fuel economy in their segments. CVTs are the standard nonmanual transmission for every car and crossover in the Nissan-brand line, except for the electric Leaf and low-volume 370Z and GT-R sports cars.

Nissan dealers have gotten customer complaints and service visits because of unfamiliarity with CVT behavior. Because CVTs have no fixed gears, drivers do not experience the gear-by-gear stepping-up sensation of traditional automatic transmissions -- only a smooth and steady increase in engine revolutions. To an uninitiated driver, the transmission could sound like it is stuck in a single gear.

Jatco itself now plans to work with U.S. car dealers to provide more information about CVTs and gather more customer feedback about its transmissions, Hata says. Last month, Ghosn labeled Jatco one of several "head winds" that are slowing down his aggressive global business plan to achieve an 8 percent operating profit by March 2017.

Ghosn said expensive problems with Jatco had cut into the company's profits last year. He later clarified that he had not meant formal recalls, but customer service issues related to the transmissions.

David Reuter, a Nissan North America spokesman, said the issues were associated with a flurry of new-vehicle launches in 2012. "They're in the past and behind us now," Reuter said.

Krueger, a one-time Toyota manager, helped Nissan bounce back from a rash of quality glitches in 2006 arising from the rapid launch of Nissan's assembly plant in Canton, Miss. This time he will be helping Nissan monitor quality from the supplier side of the aisle.