Nissan establishes mutual parts supply network in Japan, Korea and China

Ready to increase sales in Japan with all-new mini-vehicles and hybrid vehicles

2013/07/09

Summary

Infiniti Q50
The Infiniti Q50 whose production started at
Tochigi Plant in May 2013 (Auto Shanghai 2013)

 This report outlines Nissan's non-consolidated and consolidated financial results for FY2012 and production and sales enhancement plans in the Japanese market.

 To reduce the impact of yen's high appreciation that lasted through the fall of 2012, Nissan has centralized over 60% of its domestic production to the Kyushu district and has been constructing a mutual supply network for parts among the Kyushu-Chugoku district in Japan and Busan in Korea (Dalian in China will be included in the near future). At Nissan, the total of parts procurement from suppliers in the Kyushu-Chugoku district in Japan and overseas near Kyushu area is referred to as "local procurement ratio." The ratio increased from 71% to 85% with the all-new Note whose production began in the summer of 2012. Nissan is operating under the policy to keep its domestic production at 1 million vehicles primarily in Kyushu.

 Nissan's domestic production recovered its cost competitiveness after the correction of superstrong yen in 2013 and the company's non-consolidated results for FY2012 reported the first operating profit in five fiscal years. However, Nissan is firm about abiding by its principle of constructing a business structure that is not affected by fluctuation in foreign exchange.

 While the total  market demand for vehicles in Japan increased by 460,000 units from 4,750,000 units in FY2011 to 5,210,000 units, Nissan's domestic sales declined from 655,000 to 647,000 units (with the market share falling from 13.8% to 12.4%).

 Nissan's sluggish domestic sales in FY2012 are said to result from two factors; its short supply capacity for mini-vehicles whose market is growing rapidly and the Serena S-HYBRID (Simple Smart Hybrid) is the only hybrid vehicle by Nissan in the hybrid vehicle market that is also expanding rapidly. Nissan is set to address these two situations. As for mini-vehicles, the DAYZ, the first mini-vehicle developed jointly with Mitsubishi Motors, was released for sale in June 2013. As for hybrid vehicles, Nissan plans to introduce 15 new models by FY2016.

 Nissan's consolidated financial results for FY2012 showed that Nissan was the only one among the seven Japanese passenger car automakers that registered a decline in operating profit. The decline reflected the effect of the anti-Japan demonstrations in one of Nissan's main markets, China, and a supply chain problem in the U.S. market. The vehicle sales fell 62,000 units from the original projection and the market share in the U.S. declined from 8.2% in FY2011 to 7.7% in FY2012. A separate report is coming for the trends of Nissan's overseas operations.


 (Note) The "mini vehicle" is a unique category in Japan of vehicles with piston displacement of 660cc or less, overall length up to 3.4 meters or overall width up to 1.48 meters. The mini vehicles represent over one third of the Japanese automobile market because of tax privileges in addition to the low purchase price and ownership cost. However, their market is limited to Japan and the automakers are forced to settle for small margins. This report refers to all small- to larger-sized vehicles other than the mini vehicles as the "non-mini vehicles."

Related Reports:  Japanese OEMs aim for record high sales in FY2013 (Jun. 2013)