YOKOHAMA, Japan – Nissan North America Chairman Jose Munoz outlined a four-prong capacity expansion plan that could power Nissan to its 10 percent U.S. market share goal ahead of schedule.
He also said he targets increased North American operating profit margin of at least 8 percent, thanks to an influx of high-margin nameplates such as the Murano crossover and Maxima sedan.
Munoz has previously said it would be difficult to reach 10 percent by the target of March 31, 2017, without added supply.
But speaking Feb. 27 at Nissan Motor Co.’s global headquarters, Munoz said the company has a plan to meet it by opening capacity in the United States, Mexico, South Korea and Japan.
“I think that we may see the 10 percent overachieved earlier than expected,” said Munoz, who is also an executive vice president at the parent company in charge of the Americas. The combined U.S. share for the Nissan and Infiniti brands last year was 8.4 percent.
The U.S. capacity will come through squeezing extra productivity out of its plants in Smyrna, Tenn., and Canton, Miss., Munoz said. Additional supply can come from Mexico.
New factories in Brazil have relieved pressure on Mexico to ship cars to South America, opening capacity for the U.S.
Nissan has already moved to increase production of the popular Rogue crossover in South Korea for the United States.
But the next move will be tapping the vast amount of underused capacity in Japan. In recent years, when the yen appreciated against the dollar and other foreign currencies, Nissan moved much of its domestic production overseas. Now that the yen has weakened again, it improves prospects for Japanese exports.
Nissan’s Oppama assembly plant south of Yokohama, for instance, has two lines. One is idle and can quickly be switched on.
“We can achieve our 10 percent goal with the current footprint that we have and the additional capacity available in Japan,” Munoz said, declining to give a timeline or volume for Japan imports.
“We have already started to work diligently on how we can capitalize on the available capacity in Japan for North America,” Munoz said. “The sourcing opportunities are nearly endless. Almost everything we need, we can get from Japan.”
Munoz cited the Sentra small car, the Rogue crossover and the Pathfinder crossover as nameplates short on capacity.
Regional profits
Munoz also forecast a rapid rise in regional profitability this year as bigger, high-margin vehicles, such as the redesigned Murano and Maxima, arrive.
“Now we are going to enjoy growth in segments which are naturally more profitable for us,” Munoz said. “Not to mention the boost in terms of our image because of the quality and design of the new products.”
Nissan has a global goal to achieve 8 percent operating profit margin by the fiscal year ending March 31, 2017.
Munoz declined to give a target for North American operating profit margin. But he said that, as the market responsible for nearly half the company’s sales, it would be expected to achieve margins higher than the overall company’s.
Even hitting 8 percent would be a significant jump.
In Nissan’s latest fiscal quarter, North America operating profit margin was 5.6 percent, according to Akira Kishimoto, auto analyst at JPMorgan Securities Japan.
Nissan finished 2014 with record U.S. sales of nearly 1.4 million vehicles for the Nissan and Infiniti brands combined.
Its U.S. and Mexican factories have been running on three work shifts to keep pace. Last year, it expanded a factory line in Canton to build the Murano and broke ground on another plant in Aguascalientes, Mexico, to produce luxury models for Infiniti.
Munoz said there are still ways to wring more output from Nissan’s North American plants, but he didn’t elaborate.
That could be a tall order. The Smyrna plant last year turned out more than 648,000 vehicles, making it the highest-volume auto plant in the United States. Canton is expected to build more than 500,000 vehicles in 2017, up from 299,048 last year.
