The international car industry has been upended by the coronavirus pandemic, with production plants closed around the world and car sales halted during lockdowns.
Now carmakers are looking to increase competitiveness and profitability in a fast-changing world, with the shift to greener technology another big hurdle the sector is facing.
Last week, Japanese carmaker Nissan revealed a net loss of 671.2 billion yen ($6.17 billion) in the fiscal year 2019, its first annual loss in more than a decade. On the same day, it unveiled a four-year plan involving production cuts and reducing the number of models it produces from 69 to fewer than 55 models.
“The company will … reduce fixed costs by rationalizing its production capacity, global product range and expenses,” it said in a statement, with plans to “right-size” Nissan’s production capacity by 20% to 5.4 million units a year.
The plan, it said, was to achieve “sustainable growth, financial stability and profitability by the end of fiscal-year 2023” and would “shift the company’s strategy from its past focus on inflated expansion.”
Makoto Uchida, chief executive officer of Nissan, on March 3, 2020.
As part of production cuts, Nissan said it would close its plant in Barcelona from December, with the loss of 2,800 jobs, in order to “restructure, reduce costs and improve efficiency.” It warned this week that its plant in Sunderland, the largest car production plant in the U.K. would become “unsustainable” if the U.K. left the EU without a trade deal.
Also last week, Nissan, along with its partners Renault and Mitsubishi, announced a new business model “to enhance the competitiveness and profitability of the three partner companies” with each producer focusing on individual markets.
Against this backdrop of transformation in uncertain times, Nissan’s CEO Makoto Uchida spoke to CNBC on Wednesday on a wide range of topics, from Brexit to the alliance, and the rebuilding of investor trust after the high-profile, controversial departure of former CEO and Chairman Carlos Ghosn.
Here are five highlights from CNBC’s Julianna Tatelbaum’s conversation with Uchida:
On the ‘Alliance’:
“We really need to transform ourselves … I want to emphasize the point that the alliance should be a competitiveness asset for each company, and how we can use those assets to make each company grow is a key point,” Uchida said.
Former CEO of Nissan, Carlos Ghosn
On rebuilding trust:
“When I became CEO, I said that I intend to build the corporate culture where we listen to the customers, dealers and suppliers and the whole wide range of stakeholders in and outside of the organization, this is a culture where different opinions are welcome.”
On the coronavirus:
“Covid-19 has clearly disrupted our industry and (the) automotive group has very much been influenced by this crisis.”
“But first, our priorities are definitely the human and health care (factors). So how we can make sure our employees and our wider global networks, suppliers partners … safe. This is my first priority and is where the company is focusing on.”
On plant closures:
“When we talk about transformation, we need to look back at what went wrong in the past strategy and how we can restore ourselves on a steady growth path.”
“So this is the most important (thing) … one of the areas that we help pursue is that how we can have the right size (for) our production capacity with the efficiency of the operation.”
Nissan employees protest against the closure of the Japanese cars manufacturer’s plant in Barcelona on June 04, 2020.
“We want to have sustainable profit and that we must honestly address on the area of under-performance and pullback from the area that the previous over-expansion that has been done in Nissan.”
“So this means we need to optimize our production at an appropriate level and also the operation while enhancing operational efficiency.”
“We need to cautiously monitor how the (U.K.) government (is) going to make a deal in terms of Brexit, when it comes to the tariff agreement, because this would have a lot of influence in our operation.”
“But again, I would like you to focus and emphasize that we would like to keep up our brand in Europe … So this is what I can say today.”