Nissan Motor Co. Ltd. 2002 Case

Nissan Motor Co., Ltd.
Company Profile
Reference Code: 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A Publication Date: Nov 2007
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Table of Contents
TABLE OF CONTENTS Facts & Overview........................................................... 4 Business Description .................................................... 5 History ............................................................................ 6 Major Products & Services ........................................... 9 Revenue Analysis ........................................................ 10 Key Employees ............................................................ 11 Key Employee Biographies ........................................ 12 Locations & Subsidiaries............................................ 15 Company View ............................................................. 16 SWOT Analysis ............................................................ 20 Top Competitors .......................................................... 25

Company Overview
COMPANY OVERVIEW
Nissan Motor Co (Nissan) is engaged in the planning, developing, manufacturing and selling of passenger automobiles, automobile parts, and forklifts. The company operates in the Japan, North America and Europe. It is headquartered in Tokyo, Japan and employs about 186,340 people. The company recorded revenues of JPY10,468.6 billion (approximately $88.8 billion) during the fiscal year ended March 2007, an increase of 11% over 2006. The operating profit of the company was JPY776.9 billion (approximately $6.6 billion) during fiscal year 2007, a decrease of 10.9% over 2006. The net profit was JPY460.8 billion (approximately $3.9 billion) in fiscal year 2007, a decrease of 11.1% over 2006.
KEY FACTS
Head Office 17-1, Ginza 6-chome Chuo-ku Tokyo 104 8023 JPN Phone Fax Web Address Ticker # Employees Turnover (JPY Mn) Financial Year End 81 3 3543 5523 81 3 5565 2228 http://www.nissan-global.com Tokyo: 7201 186,336 10,468,600 March

Business Description
BUSINESS DESCRIPTION
Nissan Motor (Nissan) and its consolidated subsidiaries are primarily engaged in the manufacture and sales of products in the automobile segment. The company also provides financial services. Nissan operates in Japan, the US, Canada, Mexico, Australia, New Zealand, South Africa, Middle East and Asia. The company organizes its operations into two reportable segments: automobile and sales financing. Nissans automobile segment is engaged in the manufacturing and sale of passenger cars, trucks, SUVs (sports utility vehicles), light utility vehicles and mini vans. Some of the companys passenger car models include Maxima, Sentra, Altima, Versa, Z Roadstar and Z Coupe. Some its truck models are Quest, Armada, Pathfinder, Murand and Xterra. The companys sales financing segment provides financial products and services such as auto loans, car leasing, credit cards, car rental and car insurance through its wholly owned subsidiary, Nissan Financial Services (NFS). These financial services are provided primarily in Japan and North America. NFS has a wholly owned consolidated subsidiary called Nissan Plazasol, which intermediates the sale of used cars; and a non-consolidated subsidiary, Nissan Rent-A-Car Shizuoka, a car-rental company. The company has a global partnership with Renault for automobile manufacturing and sales; as well as for automotive financing. Renault holds a 44.3% stake in Nissan, while Nissan owns 15% of Renault shares. The alliance jointly operates Renault Nissan, in which both Nissan and Renault have a 50% interest. It also operates RNPO (Renault-Nissan Purchasing Organization) and RNIS (Renault-Nissan Information Services).

History
HISTORY
Nissans predecessor Jidosha Seizo was established in Yokohama in 1933. The company changed its name to Nissan Motor Co., Ltd in 1934. Nissan manufactured its first fully assembled car in 1935. Nissan acquired a stake in Minsei Diesel in 1950. It entered into a technological cooperation agreement with Austin Motors in 1952. The company exported its first passenger cars to the US in 1958. In the following year, the company commenced production in its first overseas factory in Taiwan. The company established the Nissan Motor Corporation in the US in 1960. In the following year, the company established Nissan Mexicana in Mexico and commenced production in 1966. Nissan developed and manufactured the rocket engine and launch vehicle for Japans first satellite, the Lambda 4S-5, which was launched in 1970. The company established the Nissan Science Foundation in 1974 and the Nissan Design International in the US in 1979. The company also established the Nissan Motor Manufacturing Corporation in the US in 1983. The company began marketing its vehicles worldwide under the Nissan name in 1981. Nissan Research & Development was established in the US in 1983. The company entered into an agreement with Volkswagen in 1984 to produce and sell the Santana brand of vehicles. Later that year the company acquired an equity interest in Yulon Motor in Taiwan. Nissan Europe in the Netherlands began operations in 1990. Nissan North America commenced operations later that year. Nissan acquired a stake in Siam Motors in Thailand in 1990. In 1991, the company entered into a joint venture with Hitachi and established Xanavi Informatics Corporation. The company began production in its Kyushu plant in 1992. In the same year, the company established Nissan Casting Australia and Nissan Design Europe in Germany. Nissan Motor (China) was established in Hong Kong, in 1994. Nissan Motor Manufacturing Corporation U.S.A. commenced production in 1997. Nissan and Renault signed a global partnership in 1999, whereby Renault invested JPY643 billion (approximately $5.4 billion) in Nissan, by taking a 36.8% equity stake in Nissan Motor, a 22.5% equity stake in Nissan Diesel.

History
Nissan Motor Manufacturing Corporation U.S.A. was merged into Nissan North America in 2000. Nissan and Suzuki Motor signed an agreement through which Suzuki supplied minivehicles to Nissan on an OEM bases in 2001. Nissan entered mini-car market by Moco and also opened European design centre in London in 2002. Nissan and Dongfeng established Dongfeng Motor in China in 2003. In the same year, the company and Nissan Diesel established joint small truck company. Nissan Motor Acceptance Corporation (NMAC) relocated to a 268,000 square foot customer service center in Irving, Texas in 2003, as part of the expansion of its operations in North America. Renault and Nissans common commercial organizations in Europe were established in Slovenia and Croatia respectively in 2004. In the same year, Renault Kangoo CKD assembly began in Malaysia with the support of a local partner. Renault and Nissans common commercial organization in Europe was established in Portugal in 2005. Later that year Renault and Nissan jointly developed a new common navigation and communication system. Nissan Korea was established and introduced five Infiniti models to the market starting in mid 2005. In the same year, Renault Nissan Bulgaria was established. Nissan developed a distance control assist system in March 2006. In July 2006, Nissan set up a new parts exporting base in Thailand. In the same month, Nissan developed a light duty truck platform. Nissan launched a vehicle navigation service with net access in September 2006. The 2007 Nissan Altima Hybrid, Nissans first entry into the hybrid gasoline/electric vehicle segment, made its North American debut at the 2007 Model Orange County Auto Show in California, during October 2006. Nissan opened its megastore for used-cars, Carminal Tokyo, and a brand new dealership called Tokyo Nissan Shinsha no Hiroba in Murayama in December 2006. Nissan and Renault Trucks signed a distribution agreement for the Renault Maxity light duty vehicle in January 2007.

History
Nissan and Mitsubishi Motors agreed to expand their current business collaboration by enhancing the OEM (Original Equipment Manufacturing) contract scope in April 2007. Nissan and Dongfeng announced to reinforce their light commercial vehicle (LCV) business in the Chinese market through the joint venture with Dongfeng Motor Company in March 2007. Nissan, NEC Corporation, and its subsidiary, NEC TOKIN signed an agreement to establish a joint-venture company, to focus on lithium-ion battery business for widescale automotive application in April 2007. Nissan reached an agreement to sell the Shinkoyasu property to three private companies in July 2007. Alain Dassas was appointed as the companys Chief Financial Officer in September 2007. In the same month, Nissan concluded an agreement, through its subsidiary, Nissan Forklift Europe, with the shareholders of Atlet to acquire a 100% stake in the Swedish warehouse equipment manufacturer. Nissan acquired ATLET (a company engaged in the development, manufacturing and sales of warehouse material handling equipment) through its subsidiary, Nissan Forklift Europe in October 2007. Hinduja Groups flagship Ashok Leyland and Nissan signed a binding Master CoOperation Agreement (MCA) for the formation of three joint venture companies supporting the light commercial vehicle (LCV) business in October 2007.

Major Products & Services
MAJOR PRODUCTS & SERVICES

Nissan and its consolidated subsidiaries are engaged in the manufacturing and sales of automobiles; and the provision of sales financing services. The companys key products and services include the following: Automobile Products: Cars: Maxima Sentra Altima Versa Z Roadstar Z coupe Infiniti Trucks: Quest Armada Path finder Murand Xterra Sport utility vehicles and mini vans: Titan Frontier Financial products and services: Auto loans Car leasing Credit cards Car rental Car insurance

Revenue Analysis
REVENUE ANALYSIS
The company recorded revenues of JPY10,468,583 million (approximately $88,784.1 million) during the fiscal year ended March 2007, an increase of 11% over 2006. For the fiscal year 2007, North America, the companys largest geographic market, accounted for 43.5% of the total revenues. Nissan Motor generates revenues through two business divisions: automobiles (93.5% of the total revenues during fiscal year 2007) and sales financing (6.5% of the total revenues). Revenues by Division During the fiscal year 2007, the automobile division recorded revenues of JPY9,790,484 million (approximately $83,033.1 million), an increase of 10.1% over 2006. The sales financing division recorded revenues of JPY678,099 million (approximately $5,751 million) in fiscal year 2007, an increase of 27.2% over 2006. Revenues by Geography North America, Nissans largest geographical market, accounted for 43.5% of the total revenues in the fiscal year 2007. Revenues from North America reached JPY4,550,498 million (approximately $38,592.8 million) in 2007, an increase of 11% over 2006. Japan accounted for 23.7% of the total revenues in the fiscal year 2007. Revenues from Japan reached JPY2,478,549 million (approximately $21,020.6 million) in 2007, a decrease of 7.3% over 2006. Europe accounted for 19.5% of the total revenues in the fiscal year 2007. Revenues from Europe reached JPY2,038,026 million (approximately $17,284.5 million) in 2007, an increase of 44.1% over 2006. Other foreign countries accounted for 13.4% of the total revenues in the fiscal year 2007. Revenues from other foreign countries reached JPY1,401,510 million (approximately $11,886.2 million) in 2007, an increase of 13.2% over 2006.

Key Employees
KEY EMPLOYEES
Name Carlos Ghosn Itaru Koeda Job Title Chief Executive Officer (Since: 2005) Co-Chairman and Executive Vice President (Since: 2003) Toshiyuki Shiga Hiroto Saikawa Mitsuhiko Yamashita Carlos Tavares Hidetoshi Imazu Tadao Takahashi Shemaya Levy Patrick Pelata Shiro Nakamura Kazuhiko Toida Kimiyasu Nakamura Junichi Endo Hitoshi Kawaguchi Minoru Shinohara Yo Usuba Shigeo Shingyoji Yoshiaki Watanabe Colin Dodge Chief Operating Officer Executive Vice President, American Operations Executive Vice President, Research and Development Executive Vice President Executive Vice President Vice Chairman Director Director Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Senior Vice President Executive Board Executive Board Executive Board Non Executive Board Non Executive Board Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Senior Management Executive Board Executive Board Executive Board Executive Board Board Executive Board Total Annual Comp. -

Key Employee Biographies
KEY EMPLOYEE BIOGRAPHIES

Carlos Ghosn
Board: Executive Board Job Title: Chief Executive Officer Since: 2005 Mr. Ghosn has been President and Chief Executive Officer of Nissan since 2005. He joined the company in 1999 as Chief Operating Officer and he became President in 2000 and was named Chief Executive Officer in 2001. Prior to joining Nissan, Mr. Ghosn served as Executive Vice President of the Renault Group from 1996. Before he joined Renault, he had worked with Michelin for 18 years as Chairman and Chief Executive Officer. Previously, he also worked as the Chief Operating Officer of Michelins South American activities based in Brazil; he also worked as Head of research and development for industrial tires in Ladoux, France; and as plant manager in Le Puy, France. He is also a Directors of Alcoa.
Itaru Koeda
Board: Executive Board Job Title: Co-Chairman and Executive Vice President Since: 2003 Mr. Koeda has been Co-Chairman and Executive Vice President of Nissan since 2003. Since joining Nissan in 1965, he has held various positions in production engineering, corporate planning and human resources development departments. Mr. Koeda has been a Director since 1993. He also served as Managing Director for various purchasing functions and the department of affiliated companies.
Mitsuhiko Yamashita
Board: Executive Board Job Title: Executive Vice President, Research and Development Mr. Yamashita serves as Executive Vice President, Research and Development of Nissan. He served as Senior Vice President in charge of the environmental and safety engineering, technology planning, materials and measurement engineering departments. He also oversaw the advanced vehicle engineering and electronics engineering divisions. Since joining Nissan in 1979, Mr. Yamashita has held various positions in vehicle design research & development and engineering. He transferred to Nissan Technical Center North America, Nissans engineering arm, in 2002. There,

he was responsible for all of Nissans vehicle engineering and development operations in Michigan, California, Arizona and Mexico.
Carlos Tavares
Board: Executive Board Job Title: Executive Vice President Mr. Tavares has been Executive Vice President of Nissan since 2005. Before joining his current role in 2005, he was Vice President of Nissans product strategy and product planning divisions. Mr. Tavares joined Nissan Motor in 2004 after 23 years with Renault. At Renault, he held various positions in engineering, including platform layout engineer of CLIO II and Director of the C-segment program, Megane II & Scenic II range. He also worked as General Manager of layout in advanced engineering.
Tadao Takahashi
Board: Executive Board Job Title: Vice Chairman Mr. Takahashi serves as Vice Chairman of Nissan. He is currently an Executive Vice President responsible for manufacturing, vehicle and power train production engineering, supply chain management and information systems for Nissan Motor. He is also Director of the company. Prior to assuming his current position in 2002, Mr. Takahashi was Senior Vice President in charge of the manufacturing and industrial engineering division for the Oppama, Tochigi and Kyushu plants. Since joining Nissan in 1968, Mr. Takahashi has held various positions in engineering departments. In 1998, he assumed responsibility for the Yokohama, Fuji, Oppama, Tochigi and Iwaki plants and also supervised the production control and Nissan Production Way promotion departments.
Patrick Pelata
Board: Non Executive Board Job Title: Director Mr. Pelata serves as the Director of Nissan. He joined Nissan in 1999, and is responsible for product planning and strategy. Before joining Nissan, Mr. Pelata was Executive Vice President of Renault in charge of vehicle development. He joined Renault in 1984, and later was responsible for the design of the Renault Twingo chassis in 1988 and 1993. In 1996, Mr. Pelata was appointed vice president in charge of chassis equipment engineering, and two years later, he was named Senior Vice President for vehicle development. Mr. Pelata graduated from the Ecole
Nissan Motor Co., Ltd. Datamonitor (Published Nov 2007) This profile is a licensed product and is not to be photocopied 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A Page 13

Polytechnique, the Ecole Nationale des Ponts et chaussees and the Ecole des Hautes Etudes en Sciences Sociales.
Shiro Nakamura
Board: Senior Management Job Title: Senior Vice President Mr. Nakamura serves as the Senior Vice President of Nissan. He also works as the President for both Nissan Design America and Nissan Design Europe. Prior to joining Nissan in 1999, Mr. Nakamura held various senior level positions with Isuzu Motors for 25 years and oversaw the design development of models such as Vehicross and Gemini. In 1985, he worked in General Motors in the Advanced Design Studio in Michigan.

Locations & Subsidiaries
LOCATIONS & SUBSIDIARIES

Nissan North America 333 Commerce St. Nashville Tennessee 37201 3300 USA Nissan Europe Parc de Pissaloup 13 Avenue Jean dAlembert B.P. 123 78194 Trappes Cedex FRA Nissan (China) Investment Rm. 1318, South Tower Beijing Kerry Centre 1 Guang Hua Road Chao Yang District Beijing CHN Dongfeng Motor No.29 Baiye Road ment Zone Wuhan Hubei CHN Nissan Middle East Jebel Ali Dubai ARE Nissan Motor Indonesia Kawasan Industri Kota Bukit Indah block ALot 1 14 Purwakarta 41181 Jawa Barat IDN Tan Chong Motor Assemblies 249 Jalan Segambut 51200 Kuala Lumpur MYS Nissan Motor Philippines Barangay Pulong Sta. Cruz Sta. Rosa 4026 Laguna PHL Yulon Nissan Motor 39-2 Po Kung Keng San Yi Miao Li Hsien TWN Nissan South East Asia 15th Floor, Nantawan Building 161 Ratchadamri Road Lumpini Pathumwan Bangkok10330 THA
Wuhan Economic and Technological Develop- Shi Hu Tsuen

Company View
COMPANY VIEW
A statement by Carlos Ghosn, President and Chief Executive Officer of Nissan is given below. The statement has been taken from the companys 2007 annual report. The sole purpose of a public company is to create growing sustainable value. At Nissan, we are totally focused on this purpose. However, for the first time in eight years, we missed our performance objectives in fiscal 2006. As a result, we have extended the delivery period for all Nissan Value-Up commitments by one year. The stock market recognized this shortfall and our share price mirrored our performance. However, we believe we are well below our potential. Fiscal 2006 This past year, all the headwinds we anticipated materialized and were more severe than expected. This happened the lowest point of our product cycle. Although we successfully launched new models, such as the Altima and G35, they were introduced late in the fiscal year and did not lead to overall annual volume growth. And the sales decline in our existing models offset these successful launches. In addition, our shortterm profit potential was offset by our heavy investments for the future. In order to re-boost our profitability, we have implemented several measures in Japan, U.S., Europe, and South Africa to address various issues including production capacity, dealer networks, and human resources. Yet, it is important to understand how our situation today is different from 1999, when Nissan underwent a major recovery. Today, we are fine-tuning our operations in order to boost our performance. Progress toward long-term value creation Addressing our short-term issues is important, but we also believe it is important to achieve long-term profitable growth that is measurable in the context of a solid longterm plan. In our long-term planning, the priority is to maximize free cash flow. The key drivers will be top-line growth, profitability, future investment and economies of scale through the Alliance. We have made significant progress in each area as shown below. The first driver of top-line growth will come from our future product pipeline and geographical expansion.

Company View
Once we complete the 28 model launches for Nissan Value-Up this year, we will introduce over 33 new products during the next three years. As we embark on this product offensive, we are focused on smoothing out the product-launch cadence in order to avoid a new-product drought, such as those we experienced in 2005 and 2006. This should reduce the likelihood of profit fluctuations and increase the possibility for sustainable growth. Regarding geographical expansion, one of our breakthroughs under Nissan-Value Up, we have successfully expanded our geographic presence in emerging markets as evidenced by the recent partnership with Renault and Mahindra in India. We expect significant growth in these markets. Infiniti, another breakthrough, has also been successful in accelerating its geographical expansion. After its introduction in Korea in 2005 and Russia in 2006, Infiniti will enter the Chinese and Ukrainian markets in 2007 and during 2008 extend across Western Europe. Top-line growth must be achieved with profitability. Growing volumes without an appropriate contribution to profit does not make good business sense. Profit is also key to maximizing cash flow. In this regard, brand and product value are crucial. Several third-party non-financial leading indicators have exhibited our improvement in brand and product value. J. D. Power and Associates APEAL Study in the U.S. measures owner delight with the design, content, layout and performance of their new vehicles. In the 2006 survey, Nissan and Infiniti were the segment leaders in five out of nineteen categories. Nissan has three segment-leading models, more vehicles than any other brand; Murano, Titan, and Armada. The Infiniti QX56 and M ranked at the top of their respective segments. In a recent text, Consumer Reports, an influential magazine for new car buyers in the U.S., ranked our new Altima near the top, as it tied for the numberone vehicle in the family sedan segment. And in Consumer Reports Ten best cars in America, Infinitis G35 and M were both recognized as the top picks for safety and reliability in their respective categories. Although improvement in these indicators is not immediately reflected in our financial results, this is an engine of our profitable growth for the future. There is a direct correlation between customer satisfaction and profits. But sustaining profits means preparing for the future today. We are investing massively, especially in R&D. Since 1999, our annual R&D expenditures have

Company View
doubled and will come to nearly JPY500 billion in fiscal 2007. And through the Alliance, we now have extensive collaboration with Renaults R&D. Our most urgent technical challenge today is to meet societys environmental expectations. Thats why 40 percent of our budget for advanced engineering is devoted to the Nissan Green Program 2010, our five-year environmental blueprint. For our industry, environmental sustainability represents the biggest engineering challenge. And no matter what you may hear or read, there is no silver bullet and no quick fix. In this race, the finish line is nowhere in sight. So along with Renault, we are pursuing every possible avenue of environmental progress - from hybrids to fuel-cells to electric and clean diesels. In April, we announced that Nissan will introduce a clean-diesel passenger car for all fifty states in the U.S. in 2010. We will launch a Nissan Maxima powered by a cleandiesel engine co-developed by Nissan and Renault. A focused technology strategy will once again be a pillar of Nissans competitive strength and the core of our brand identity. Our alliance with Renault, the last driver of profitable growth, is another pillar of future strength. This model is unique and although not widely understood, its effectiveness is unparalleled in the automotive industry. Together, we now rank fourth in sales volume and second in total profitability in the global industry. We share platforms, technologies and best practices in order to improve our investment efficiency. And we continue to achieve greater purchasing synergies each year. Our collaboration in R&D allows us to cover every potential avenue of environmental progress. Together, we advance on all fronts. As for purchasing, the Alliance has supported our breakthrough to develop new supply sources in Leading Competitive Countries, especially in Eastern Europe. We will also accelerate progress in India with the Alliance. There are still more areas of cooperation that have yet to be realized. Outlook In fiscal year 2007, we will launch 11 new products globally. The most important of these introductions will be the five models for the U.S. We will launch an all-new version of the Altima coupe, an all-new version of the Infiniti G37 coupe, the all-new compact crossover Rogue, the new compact luxury crossover Infiniti EX, and an allNissan Motor Co., Ltd. Datamonitor (Published Nov 2007) This profile is a licensed product and is not to be photocopied 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A Page 18

Company View
new version of the Murano. Although we will again face a challenging environment, I believe that we will get back on track in terms of profit growth with these new models. Long-term value creation Despite our commitment to long-term value creation, in recent years, our marketadjusted total return to shareholders has been negative. In addition, our key valuation multiples, including PER, have been lower than our main competitors. Of course, multiples are only rough estimates and the differences may be attributed to various factors, including accounting differences. However, given the size of this gap to our competitors, its obvious that the market is discounting the value of Nissan. Based on our analysis, a significant part of this gap is due to investor perceptions regarding our long-term performance. To a lesser extent, our recent short-term performance has also contributed to this gap. Since the two perceptions are strongly interrelated, our weak short-term performance has negatively influenced perceptions regarding the viability of our long-term performance. In order to close this gap, we must first deliver strong short-term results. And we must do this without being short-term oriented because the market always rewards companies that perform over the long-term. When we can demonstrate strong shortterm performance, the long-term performance perceptions should improve. What will close it is consistently delivering strong short-term results. Of course, we will not stop there. We will further improve perceptions of our long-term potential via transparent investor communications. After we successfully put ourselves on a solid track of profitable growth, investors desires for more transparency increased significantly. They want to know more about our future strategy and vision and have a better understanding of how we will deliver our plans. Performance and transparency make for credibility and that is what it takes to convince the market of our future potential. In this uncertain business environment, a company is required to not only consistently deliver strong performance, but also communicate to the market in a transparent manner. A company cannot completely avoid all the ups and downs in its performance. But it should learn from past mistakes and never make them twice; this behavior is part of Nissans DNA. We are committed to gaining the trust of the market and delivering superior performance.

SWOT Analysis
SWOT ANALYSIS
Nissan is one of the leading automotive brands in the world. The company has a wide geographic base. It has operations in various regions including Japan, the US, Canada, Mexico, Australia, New Zealand, South Africa, Middle East and Asia. In addition, the group is well diversified in terms of revenue generation from these geographies. The wide geographical reach of the company proves to be strength as it aids in catering to different markets and reap the benefits of these emerging markets. However, the company is threatened by rising raw material prices, which could adversely impact its operating margins.
Strengths Strong brand name Wide geographic base Partnership with Renault Robust revenue growth Opportunities Acquisition of ATLET Strategic initiatives Increasing demand for hybrid cars Opportunities in India and China Threats Rising raw material prices ELV directive Tightening emission standards Weaknesses Declining profitability Weak performance in the domestic market
Strengths
Strong brand name Nissan is one of the leading automotive brands in the world. Some of the companys passenger car brands include Maxima, Sentra, Altima, Versa, Z Roadstar and Z Coupe. The truck models of the company include brands like Quest, Armada, Pathfinder, Murand and Xterra. In the J D Power and Associates APEAL Study in the US in 2006, Nissan was the segment leader in five out of nineteen categories. Also, a magazine for new car buyers in the US ranked Nissans new Altima near the top in the family sedan segment. Also, Infinitis G35 and M were recognized as the top picks for safety and reliability in their respective categories in the survey for the Ten best cars in America. Nissans brand strength enables the company to gain investors confidence and also provides it with a competitive advantage.

SWOT Analysis
Wide geographic base The company has a wide geographic base. It has operations in various regions including Japan, the US, Canada, Mexico, Australia, New Zealand, South Africa, Middle East and Asia. In addition, the group is well diversified in terms of revenue generation from these geographies. For instance, in 2007 the group generated 43.5% of its total revenues from North America, 23.7% from Japan, 19.5% from Europe and 13.4% from other foreign countries. The wide geographical reach of the company proves to be strength as it aids in catering to different markets and reap the benefits of the emerging markets. Partnership with Renault The company has a global partnership with Renault for automobile manufacturing and sales; as well as for automotive financing. Renault holds a 44.3% stake in Nissan, while Nissan owns 15% of Renault shares. The alliance jointly operates Renault Nissan, in which both Nissan and Renault have a 50% interest. It also operates RNPO (Renault-Nissan Purchasing Organization) and RNIS (Renault-Nissan Information Services). Both the companies share platforms, technologies and best practices. Together, they rank fourth in sales volume and second in total profitability in the global industry. Furthermore, the alliance has taken a number of strategic initiatives in order to fuel its performance. For instance in February 2007, Renault and Nissan together with Mahindra, announced to build a plant in Chennai, India that would open in 2009, with a planned capacity of 400,000 units. Further in July 2007 Nissan began the sales of the Nissan Aprio, a subcompact car for the Mexican market based on the Renault Logan, built in the Renault passenger car plant in Brazil. The alliance with Renault is a strong driver of growth for Nissan which would enhance the market position and profitability of the company. Robust revenue growth The company recorded a robust revenue growth rate over the last few years. The revenues of the company increased at a CAGR of 12% during 2004-2007 to reach JPY10,468,583 million (approximately $88,784.1 million) in 2007. The companys robust revenue growth, driven by increase in sales volume, adds to its bargaining power.
Weaknesses
Declining profitability In spite of recording a robust growth in revenues, the profits of the company have been declining over the years. The operating profit of the company declined at a CAGR of 2% during 2004-2007 to reach JPY776.9 billion (approximately $6.6 billion)

SWOT Analysis
in 2007. Similarly the net profit of the company declined at a CAGR of 3% during 2004-2007 to reach JPY460.8 billion (approximately $3.9 billion) in 2007. Furthermore, the net profit margin declined from 6.7% in 2004 to 4.4% in 2007. Declining profitability implies ineffective cost management, and could adversely impact availability of resources to pursue growth plans. Weak performance in the domestic market Nissan has recorded a weak performance in Japan, its domestic market in fiscal 2007. Revenues from Japan reached JPY2,478,549 million (approximately $21,020.6 million) in 2007, a decrease of 7.3% over 2006. Furthermore, the operating profit from Japan was recorded at JPY270.6 billion (approximately $2.3 billion) in 2007, a decrease of 31% over 2006. This was primarily due to the decrease in overall volumes in Japan. Weak performance in the domestic market would drastically affect the overall performance of the company.
Opportunities
Acquisition of ATLET Nissan acquired ATLET, a company engaged in the development, manufacturing and sales of warehouse material handling equipment, through its subsidiary, Nissan Forklift Europe in October 2007. Nissan Forklifts key markets include Europe, the US, Japan and other global markets. ATLET has a strong presence in Europe, Nissans main market, and is also experiencing growth in emerging markets. Post merger the companies would produce more than 36,500 units worldwide with an annual turnover of 858 million. The acquisition of ATLET would thus further enhance the top line of the company. Strategic initiatives Nissan has entered into a number of strategic initiatives in the recent past. For instance, in October 2007, Nissan and Hinduja Groups flagship Ashok Leyland signed a binding Master Co-Operation Agreement (MCA) for the formation of three joint venture companies supporting the light commercial vehicle (LCV) business. Earlier in April 2007, Nissan, NEC Corporation, and its subsidiary, NEC TOKIN signed an agreement to establish a joint-venture company, to focus on lithium-ion battery business for wide-scale automotive application. Also, in March 2007, Nissan and Dongfeng announced to reinforce their light commercial vehicle (LCV) business in the Chinese market through the joint venture with Dongfeng Motor Company. Previously, in January 2007, Nissan and Renault Trucks signed a distribution agreement for the Renault Maxity light duty vehicle. Strategic initiatives such as these would further fuel the market position of the company and in turn enhance its profitability.

SWOT Analysis
Increasing demand for hybrid cars Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach 4.5 million units in 2013. Rising energy costs and increased emissions regulations are likely to increase demand for HEVs. The US is expected to experience the highest level of demand for HEVs, estimated at two million units in 2013. Hybrid engines are more fuel efficient and less polluting than conventional gasoline and diesel engines. With the all-new 2007 Nissan Altima Hybrid, Nissans first entry into the hybrid gasoline/electric vehicle segment, Nissan is building up its competency in manufacturing hybrid vehicles. The company is therefore well positioned to exploit the growing demand for hybrid cars. Opportunities in India and China China and India are expected to drive global demand for light vehicles through much of this decade. Light vehicle production in China is expected to increase from 4.3 million units in 2005 to 7.7 million units in 2010 while light vehicle production in India is forecast to increase from 1.4 million units to 2.5 million units during the same period. The company is taking various steps in order to expand its presence in these economies. For instance, in February 2007, Nissan and Renault together with Mahindra, announced to build a plant in Chennai, India that would open in 2009, with a planned capacity of 400,000 units. Also, in China the company has invested $1.6 billion since 2003 in partnership with Dongfeng, with recent investments in a new engine plant and a new R&D center. The company can thus fuel its top line by leveraging its strong presence in India and China.
Threats
Rising raw material prices The price of raw materials used by Nissan namely steel, aluminum, paints, plastics and zinc has been increasing in recent times. For instance, For instance, the price of cold rolled steel coil rose from $613 per ton in January 2006 to $696 per ton in May 2007. With the merger of Arcelor and Mittal Steel, there is possibility of further consolidation in the industry leading to increase in prices. Also, the increase in the crude oil prices from $60 per barrel in October 2006 to $95 per barrel in November 2007 has also affected prices of plastic materials used extensively in the automotive industry. In addition, the prices of important metals used by the company have shown increase in their prices. Zinc prices are expected to average $3,150 per ton in 2007, up from $1,385 per ton in 2005. Aluminum prices, meanwhile, are expected to average $2,500 per ton in 2007, up from $1,900 per ton in 2005. Rising raw material prices are likely to negatively affect the operating margins of the company.

SWOT Analysis
ELV directive Japan enacted the Automobile Recycling Law in July 2002, which required manufacturers to take back air bags, fluorocarbon and shredder residue derived from end-of-life vehicles (ELV). The law has become effective from 2005. Broadly the ELV directive makes vehicle manufacturers responsible for taking back end-of-life vehicles offered for sale after July 2002 for dismantling and recycling. Although this law was enacted in Japan, they have been adopted by Europe. Similarly, manufacturers in the Europe must not use specified hazardous materials in vehicles offered for sale in the European Union after July 2003.The regulation also specifies that vehicle parts used in new vehicle sold in the European Union after December 2008, must be designed to be re-usable and recoverable. Also, Taiwan, Korea and China have plans to implement automobile recycling laws in the near future, following the regulations established by the European Union and Japan. ELV regulations would impose additional costs on the company, which could adversely affect its margins. Tightening emission standards The emission standard in the automobile industry which prescribes the norms for engine standards has been changing rapidly and in recent times different countries are coming out with new emission standards. For instance, in 2005, the European Union created a new emission standard (Euro5) which decreases the emission limits for gasoline vehicles and diesel vehicles as compared to Euro4 level and becoming effective from 2009. Similarly, during 2005 various states in the US adopted similar standards known as Zero Emission Vehicle (ZEV) regulation which also becomes effective from 2009. This trend was followed by the developing countries as well. Consequently, China, South Korea and other Asian countries have come out new emission regulations to be effective from 2007. Tightening emission would require Nissan to come out with engines which conform to these regulations and would increase its manufacturing cost.

Top Competitors
TOP COMPETITORS
Audi AG Bayerische Motoren Werke AG Brunswick Corporation Crown Equipment Corporation Cummins, Inc. Daihatsu Motor Co. DaimlerChrysler AG Deere & Company Denso Corporation Fiat S.p.A. Ford Motor Company Fuji Heavy Industries Ltd. General Motors Corporation Honda Motor Co., Ltd. Hyundai Corporation Isuzu Motors Limited Kanto Automobile Corporation Ltd. Kia Motors Corporation Kssbohrer Gelndefahrzeug AG Mazda Motor Corporation Mitsubishi Motors Corporation Nacco Industries, Inc. Navistar International Corporation New United Motor Manufacturing, Inc. PSA Peugeot Citroen S.A. Suzuki Motor Corporation Toyota Motor Corporation Volkswagen AG Yamaha Motor Co., Ltd.

Nissan Motor Co. Ltd. 2002 Case

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Reference Code: 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A Publication Date: Nov 2007

Nissan Motor Co., Ltd. Datamonitor (Published Nov 2007)

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