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Datsun brand set to go as Nissan rolls back Ghosn's expansionist strategy

Production closures set to hit emerging markets hard

Reuters 

Nissan

Nissan Motor is likely to axe its brand, drop some unprofitable products and close a number of assembly lines worldwide as it seeks to boost profits by getting smaller, two company sources with direct knowledge of the matter said. Known internally as ‘performance recovery’ plan, the proposed steps mark a sharp break with Nissan’s strategy under ousted leader Carlos Ghosn, who pursued ambitious vehicle sales targets in the US and other major markets.

The plan is the firm’s latest attempt to pull itself out of crisis after was arrested for financial misconduct — charges he denies. The scandal has strained an already dysfunctional alliance with Renault and thrown Nissan into disarray as it finds itself on course to book its lowest operating profit in 11 years. Sources said Nissan will likely kill loss-making variants for the Titan pickup.

A planned shuttering of under-utilised production lines will most probably hit plants in emerging markets building and other small cars hardest, they added.

The second source said all markets with factories except China were being looked at for possible reductions in production capacity. That source also said that there were no plans to close an entire plant or withdraw completely from any country.

In the US, the plan calls for fresh efforts to weed out the practice of buying market share by selling vehicles to rental car and other fleet operators at heavy discounts. “We’re trying to clean up,” a source said, adding under Ghosn, Nissan sought to meet sales objectives at any cost, including “giving away cars” to fleet customers.

Datsun brand set to go as Nissan rolls back Ghosn's expansionist strategy

A team led by Jun Seki, a senior vice-president and incoming vice-chief operating officer, is expected to unveil the wide-ranging plan this month, said the sources. Nissan declined to comment. Seki is part of a team that will see Makoto Uchida, Nissan’s head of China, take the helm.

The firm will roll back an aggressive expansionist strategy set in motion under a five-year plan called Power 88, which aimed to raise global market share to 8 per cent by FY16 — goals that were never achieved.

The brand — revived for emerging markets under after being phased out in the 1980s — will likely bear the brunt. The sources said problems emerged after Nissan began deploying the no-frills cars in 2014 in small markets such as Indonesia, India, Russia and South Africa. In Indonesia, after a relatively good start, Datsun cars soon began eating into Nissan sales. There had been similar outcomes in India, South Africa and Russia, one of the sources said, adding, “We ended up pushing two mainstream brands in a market where you have a 1-2 per cent market share. You can’t do that”.REUTERS

First Published: Thu, October 24 2019. 02:27 IST
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