Automotive News - May 19, 2008 - (Page N29)

MAY 19, 2008 • N29 NISSAN’S In 1999, Nissan was paralyzed by bureaucratic inertia. It took a non-Japanese to whip the automaker into shape. 50 Years in America FRANCISCO LEONG/AFP PHOTO/NE WSCOM T he basic problem facing Nissan North America in 1999 when Carlos Ghosn arrived was the same one facing Nissan of Japan: The company was thinking too small. “There was not enough ambition in the company, on either side,” Ghosn recalls today from his Tokyo office. “I thought neither our Japanese executives nor our American executives understood.” Dispatched by Renault Chairman Louis Schweitzer to represent the automaker’s new 36.8 percent ownership interest, Ghosn wasted no time putting a fire under the ailing Japanese automaker. At the time, Nissan’s management — a creature of Japanese business culture — was unable to jettison many affiliated suppliers and lay off employees. For the United States, Ghosn informed management that Nissan’s 3.5 percent share made no sense and was unacceptable. “I told them: ‘Look, I’m not going to play in the second league. I want Nissan to play in the first league,’ ” Ghosn, now 54, recalls. “ ‘It may take years to do this, but I’m never going to accept a secondtier role for Nissan.’ “I looked at our competitors. And there was no reason that Nissan was half the size of Toyota or Honda in the United States. We have the best engineers and enough resources, and we could do more exciting vehicles than they could.” CARLOS GHOSN Earliest Nissan involvement: 1999 Role: CEO Key influence: Restored Nissan’s position in North America by pouring investment into products, factories and engineering 50-50 Clearly, Ghosn had his challenge cut out for him. And privately he gave himself only a 50-50 chance of reviving Nissan. Long dependent on North America for volume and profit, Nissan was in a downward spiral by 1999. The automaker had racked up $22 billion in debt. Tokyo’s complicated operating losses were depleting its war chest for new product initiatives elsewhere. And its lack of initiatives was translating into more operating losses. U.S. market opportunities such as minivans and workhorse pickup trucks were being lost. Beckoning segments, such as car-based SUVs, were being ignored. Talent was being squandered. A brand image once associated with affordable sportiness and technology was being squandered on hohum fleet sales. U.S. sales fell to 622,434 in 1999, a decline of more than 150,000 since 1994. And sales fell even though Nissan Division was outspending Toyota, Honda, Mazda, Hyundai, Kia, Mitsubishi, Suzuki and Subaru on a pervehicle basis in advertising. Typical of the problem was the Altima. In the 1990s, the U.S. market called for a roomy family sedan from Nissan to compete with the big-selling Toyota Camry and Honda Accord. Instead, recalls Norio Matsumura, a senior executive with Nissan’s overseas operations in the ’90s, because of cost concerns, U.S. dealers would have to make do with the narrower vehicle chassis being used for the Japanese market Bluebird sedan. The regrettable Ghosn committed nearly $1 billion more to creating a Mexican small-car production center that would supply the region with Sentras and the new Versa. An additional $500 million went to creating a diverse American engine operation and moving the Pathfinder and Maxima to Nissan’s Smyrna, Tenn., assembly lines. To keep up with the expanding portfolio, he boosted North American engineering and research activity outside Detroit. Hopeless? Eight years later, Nissan and Infiniti have cracked 1 million U.S. sales for two years running. The compromise made the U.S. Altima “a failure compared to Accord and Camry,” Matsumura says. “Nissan in the ’90s,” he says, “had difficulty investing.” U.S. company now delivers almost twothirds of Nissan’s global profits, Ghosn says. And in the first quarter of 2008, the company had doubled its 2000 market share. “The opportunity to revive Nissan was considered to be a hopeless case,” Ghosn reveals. “But because it was hopeless, it made it a more exciting opportunity.” — Lindsay Chappell No time to lose Ghosn did not have that difficulty. The multilingual, multicultural, Brazilborn executive spoke in precise and clipped English and prescribed strong medicine. He closed unproductive factories in Japan, laid off thousands of workers, sold unprofitable supplier holdings and channeled the proceeds into expansion in North America, where the market was booming. Just a year into his role, Ghosn committed to a billion-dollar manufacturing project that would make Nissan the first Japanese company to build full-sized pickups. The Canton, Miss., plant additionally gave both Nissan and Infiniti dealers a full-sized SUV and re-established Nissan in the minivan market, where Honda and Toyota were gaining U.S. dominance. 9 2003 5 Infiniti G3 stored The G35 re dismal fter a Infiniti a the 1990s. decade in iti lished Infin It “estab r, as a laye as a real p 3-series legitimate ” said competitor, to, uramo David M ief of editor-in-ch Sport Nissan It also got magazine. out thinking ab people ad of e Infiniti inst cura. Lexus or A

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Automotive News - May 19, 2008 Ford eyes smaller F-150 cousin Sonic: Mercedes tries to 'extort' store upgrades Chrysler seeks 25% slash in parts prices Dealership managers pushed Chrysler's latest incentive Crain names 4 new VPs Automotive News staffers win Wheel Awards GM will keep cutting sales to fleets GM studies the future of full-sized trucks American Axle plans to expand in Asia At Lexus, the sales laggards are cars VW positions Tiguan as 'GTI' of small SUVs Tata enters race for 100-mpg car Harley Earl was the daddy of auto design Focus will follow Fiesta as a global vehicle Lexus shows how it sweats details Industry slows tide of state CO2 rules Chevy tweaks Cobalt to add fuel economy Be careful; don't do anything dumb Looking ahead to different industry They thought they knew everything Cerberus doesn't belong in autos Dealers as scapegoats Smart, steady growth works best for suppliers Farley's smart to value Ford's heritage Absurd logic in the U.S., cowardice in Germany BMW, Daimler keep a wary eye on U.S. economy James Franey Dealers' approach can lessen pain of staff cuts GM plans to distinguish Opel with image makeover Make or buy? Software can estimate costs for company Honda, Toyota see robots in their futures Bosch aims to lead in hybrids technology King of hearts Clarke aims to get GM back on track in N.A. Fields navigates Ford through 'white water' LaSorda steers Chrysler's global ventures Toyota's Lentz: A crash course in hard times Truck sales fall 13% in April Modine sells Thermacore unit Alcoa to close Mexico plant Toyoda Gosei expands in Mexico Hayes Lemmerz plans to close Georgia factory Japan's sales slide 2% in 1st quarter; output climbs Dealers Hyundai let U.S. direct Sonata freshening After .com and .edu, is it time for .car? Panoramic sunroof of Lincoln MKS boosts Inalfa sales Chrysler hedged gas price bet Smart phones help dealerships retain customers CAW completes pacts with GM, Chrysler early GM, UAW resolve 2 disputes New media buyer for Chrysler Visteon names Stebbins CEO Convertible registrations drop Ferrari: From denial to debut Buildings Porsches in U.S.? Depends whom you ask Toyota will go slow in Tupelo Ghosn is glum on prices, U.S. sales prospects Pischetsrieder has earned a celebratory cigar NHTSA spins VINs, averts meltdown F_RD GU_S WI_ BUI-_KS 50 PEOPLE FOR 50 YEARS Yutaka Katayama Clarence Talley Jim Morton Pete Brock Marvin Runyon Yoshikazu Hanawa Bill Bruce Shin Maki Jack Collins Mitsuya "Scape" Goto Bob Link Soichi Kawazoe Jerry Hirshberg Takashi Ishihara Roy Rogers John Parker Bob Thomas Teruo Uchino Morrie Sage Bob Thomas Nobe Wakatsuki Earl Hesterberg Carlos Ghosn Lee Clow Jerry Benefield Yutaka Kume Doug Betts Tim McCarthy Jed Connelly Atsushi Nakatsuji Dave Hubbard Joe Opre Patrick Pelata Yoshiyuki Kimura Diane Allen Mad Mike Taylor Chuck King Larry Dominique Mark Igo Mitsuhiko Yamashita Shiro Nakamura Tom Mignanelli Dick Roberts William Cushing Emil Hassan Chester Luby Jane Nakagawa Louis Schweitzer MR. K Ray Lemke Richard McCutcheon

Automotive News - May 19, 2008

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