(Reuters) - Nissan Motor Co Ltd (7201.T) will pull back from Europe and elsewhere to focus on the United States, China and Japan under a plan that represents a new strategic direction for the embattled carmaker, people with direct knowledge of the plan told Reuters.
The “operational performance plan” is due to be announced on May 28 and goes beyond fixing problems from ousted leader Carlos Ghosn’s aggressive expansion drive, the people said.
Pursuit of market share, particularly in the United States, led to steep discounting and a cheapened brand. Under the new, three-year plan - reported here for the first time - Nissan aims to restore dealer ties and refresh lineups to regain pricing power and profitability, the people told Reuters.
“This is not just a cost-cutting plan. We’re rationalising operations, reprioritising and refocusing our business to plant seeds for the future,” one of the people said.
The plan also aims to cut competition and expand cooperation with alliance partners, the people said. Nissan will follow Mitsubishi Motors Corp (7211.T) in plug-in electric hybrid vehicle technology, with the smaller peer taking the lead in Asian markets outside China and Japan. France’s Renault SA (RENA.PA) will likely focus on electrical vehicle technologies and Europe.
Nissan and Mitsubishi declined to comment. Renault did not immediately respond to a request for comment.
The plan, led mainly by Chief Operating Officer Ashwani Gupta rather than Nissan’s low-key chief executive, Makoto Uchida, is aimed at freeing resources to invest in products and technology for the United States, China and Japan, the people said.
“The net effect is even though we reduce our R&D spend this year versus last year and make other savings, we pump those freed-up resources back into core markets and core products,” said one of the people, who declined to be identified as they were not authorised to speak with media on the matter.
The plan is likely to take up to two weeks to be finalised, with sales and earnings targets complicated by the anticipated long-term impact on auto sales of government measures worldwide taken to stop the coronavirus outbreak, the people said.
In July, Nissan targeted an operating margin of 6% on revenue of 14.5 trillion yen ($135.83 billion) by March 2023, versus 3% and 13 trillion yen forecast at the time for the year ended March 2020 - the results of which are scheduled for release later this month. Management has since changed, with Uchida and Gupata appointed in December.