Nissan Motor Company (Japan)

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Nissan is Japan's second largest carmaker (after Toyota, and well ahead of Honda), effectively controlled since 1999 by French group Renault. The company achieved a remarkable turnaround during the 2000s under trouble-shooting CEO Carlos Ghosn, parachuted in to overhaul the business. At the end of the previous decade Nissan had been struggling under the weight of a crippling debt burden. Rescue discussions with several manufacturers, including DaimlerChrysler and Ford, came to nothing. Then France's Renault stepped in, picking up a large stake in the company. After a year of focused and ruthless cost-cutting, as well as a sell-off of unnecessary peripheral businesses, the company delivered its best performance for more than a decade in 2001, and has continued to go from strength to strength, despite a short-lived slowdown in 2006 and 2007. Despite the impact of the 2011 Japanese Earthquake, the company reported record production levels and sales for that year. It has continued to grow steadily, and in 2016 agreed to acquire a controlling stake in domestic rival Mitsubishi Motors.

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Adbrands Company Profiles provide a detailed analysis of the history and current operations of leading advertisers, agencies and brands worldwide, and include a critical summary which identifies key strengths and weaknesses. Adbrands Account Assignments tracks account management for the world's leading brands and companies, including details of which advertising agency handles which accounts in which countries for major markets. The Adbrands Company Profile of Nissan summarises the company's history and current operations. Subscribers may access the following website links:

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Recent stories from Adbrands Update:

Adbrands Daily Update 8th Sep 2019: Having abruptly dismissed CEO Hiroto Saikawa a month ago, Nissan named as his successor Makoto Uchida, previously president of Nissan China. Ashwani Gupta, currently chief operating officer of alliance partner Mitsubishi Motors, becomes chief operating officer.

Adbrands Daily Update 25th Sep 2019: "Mondays". The gags in TBWA New York's funny new film for Nissan's Murano model start low-key and then build to greater and greater levels of absurdity. There are some fine laugh-out-loud moments, especially an imaginative use of the car's rear parking camera and that flat-bed truck presentation. We think this boss should really be a little more appreciative of such hard-working and eager-to-please employees.

Adbrands Daily Update 9th Sep 2019: Nissan's board dismissed CEO Hiroto Saikawa following an internal investigation which found he had received improper stock-based performance compensation worth around $440,000. That proved the final straw in long-simmering discontent over Nissan's recent performance, and the continuing furore over former chairman Carlos Ghosn. In 2013, when he was group EVP, Saikawa apparently asked colleagues to explore ways to increase his compensation. As a result, Nissan said, other unnamed employees had improperly falsified documents to increase his performance pay. Saikawa was unaware of any improper accounting, and has offered to repay the additional sum he received. However, he leaves the group with immediate effect and will be replaced on an interim basis by current COO Yasuhiro Yamauchi.

Adbrands Social Media 26th Jul 2019: "World of Distraction". TBWA NY really puts the boot into our modern-day obsession with screens in general and smartphone screens in particular in this splendid campaign for Nissan USA. To highlight the Nissan Rogue's camera-powered safety features, it offers a comic-dystopian vision of a society where everyone has eyes only for their mobile display. But not the cool kids in the Nissan; they can let their car fend off the dangers of a distracted world while they survey the comic absurdity of their pixel-obsessed peers.

Adbrands Daily Update 26th Apr 2019: Renault is attempting to broker a lasting peace with partner Nissan by proposing several options including a full merger of the two companies on equal terms. That would address Nissan's principal concern: the current inequality in their relationship, where Renault holds 43% of the much larger Japanese company's equity, while in return Nissan has only 15% of the French group. Under the new proposal, each company's shareholders would get around 50% of a merged entity. The negotiations have gained urgency from deteriorating performance at Nissan, which warned this week that operating profit for its latest fiscal year just ended will be almost 30% lower than it predicted only two months ago as a result of weak performance in most global markets.

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Background

Free for all users | see full profile for current activities: The core of the business was founded by engineer Hashimoto Masujiro as Kwaishinsha Motor Car Works in 1911, initially to import and repair American-made vehicles. In 1914, the company put its first own-model into production, naming it DAT (the Japanese for 'hare') after the initials of the three principal investors (Den, Aoyama and Takeuchi). When a smaller size DAT car appeared in 1931 it was initially called 'son of Dat'. This quickly evolved into Datsun and the new brand name stuck. The business was formally established as Jidosha Seizo Company in 1933, under the leadership of Yoshisuke Aikawa, and taken over by shareholder Nihon Sangyo Co in 1934. The carmaker's name was changed that year to Nissan, combining the first two syllables of Nihon Sangyo's name. (Despite the parent company's name, the Datsun brand was maintained until the mid-1980s). The company carved out a niche with small, affordable cars which undercut the larger models imported from the US. But inevitably the Second World War brought problems, and Nissan was taken over by the Japanese government to produce military vehicles.

By the end of the war, Nissan had lost considerable ground to family-controlled Toyota which had stolen Nissan's dealerships and much of its market. But a deal with the UK's Austin Motor Company to manufacture and distribute their cars in Japan helped the company through the early part of the 1950s. As the decade progressed Nissan began to look at overseas markets. In 1958, the first Datsun sedan was exported to the US, followed by pick-up trucks a year later. In 1960, Nissan Motor Corporation was established in the US, with a spin-off business established in Mexico the following year. Europe came next, with a test delivery of 700 Datsun Bluebirds to Finland in 1962. In 1966, Nissan established the first Japanese-owned car factory in the US, and set up importers throughout mainland Europe, including Volkswagen in the UK and Germany. Models like the Bluebird and 510 sedan were successful in both the US and Europe, but it was the fuel crisis of the 1970s which really made Nissan's day. As rising petrol prices damaged sales of gas guzzlers, especially in the US, the low consumption Sunny reaped the rewards and Nissan's business boomed. By 1975, Nissan was the biggest car importer in the US.

The 1980s saw the development of a European manufacturing base. The company bought into Spanish maker Motor Iberica in 1980 and started production of the first local model, the Nissan Patrol, in 1983. Factories followed in Belgium and the UK, and by the middle of the decade Nissan was Europe's best-selling Japanese car brand. It was at this point that Nissan's problems began to emerge. Much of the brand's success in the UK was the result of hard work by the local dealership, a business run under license by Romanian refugee Octav Botnar. During the 1970s he had built Nissan's UK market share to more than 4%, but relations between the two companies were becoming increasingly strained, particularly after the establishment of Nissan's UK factory. The Japanese attempted to end the partnership at the end of the 1980s and take back control of their brand, but Botnar refused to give in. Shortly afterwards he was unexpectedly served with a massive £250m lawsuit from the UK's Inland Revenue, who accused him of avoiding income tax by passing fees from the business through several charitable trusts. Botnar claimed that Nissan had tipped off the taxman, and he fled the country. (Criminal charges were eventually dropped a few weeks before he died of cancer in 1998. A year later, the Inland Revenue managed to reclaim around £55m of back tax from Botnar's estate).

The publicity surrounding the Botnar case effectively destroyed the launch of Nissan's new Primera model in the UK, and also deprived the company of an effective UK dealer network. The group reportedly spent around £1.6bn rebuilding its network and upgrading the UK factories over the next few years. Business improved in 1989 with the successful launch of Nissan's spin-off luxury marque Infiniti into the US market. But as the 1990s progressed, financial problems got worse for Nissan worldwide. A disastrous joint venture with telecoms company DDI to provide cellular communications in 1992, was followed by a massive slump in domestic sales, and Nissan went into the red for five years, finally clawing back a profit in 1997, after massive cost-cutting and restructuring. But 1998 brought new pain, particularly in the US. Poor American sales, combined with a disastrous leasing program left the company nursing a $513m loss in North America alone. In its home market, as its market share slumped, Nissan was overtaken as Japan's #2 car company by Honda. Toyota overtook Nissan to become the #1 Japan brand in Europe a year later. Meanwhile the group's debts continued to escalate, rising to as much as $34.5bn, much of it in loans from the Japanese government as it tried to support massive underperformance within its leasing unit and at its diesel engines division.

In 1998 Nissan signed an alliance with DaimlerChrysler to produce commercial vehicles for the Far East. After that the German company spent several months trying to negotiate some form of broader rescue plan, but found no way around the biggest obstacle, the company's awesome debt. Just before a deal could be finalised in 1999, DaimlerChrysler got cold feet and walked away from the table, claiming it had enough on its hands just integrating its own merged business. The ball dropped by Daimler was caught by Renault, which had recently completed a sizeable internal reorganisation of its own. The French company acquired a 36.8% stake in Nissan for $5.4bn, and appointed senior executive Carlos Ghosn, who had already earned a nickname as "Le Cost Killer" for his work at Renault, to take control of Nissan's restructuring.

Among Ghosn's first initiatives was to combine the platform used by Renault's Clio and Nissan's Micra small cars. (The new models began production in 2003). Later in 1999, he announced plans to cut 21,000 jobs, close factories and terminate contracts with suppliers in a drive to save one trillion yen. The biggest cuts were in Japan, where car capacity was cut by 30%, with the closure of three factories and two engine facilities. Offices in New York and Washington were closed, the group set about unpicking the group's complex and largely unprofitable network of "favoured" suppliers, and sold off a string of peripheral businesses. More controversially Ghosn chose to sacrifice market share in order to regain profitability. The scale of the task was revealed a few months later when the group reported record losses for the year to March 2000 of Y684bn ($5.6bn) including restructuring costs.

By the end of 2000, it was becoming clear that Ghosn would succeed in his task of turning the company around. The group reported very strong half year profits, elevating Ghosn to the status of a national hero in Japan. Announcing the company's full-year performance in 2001, Ghosn announced that Nissan had "moved from the emergency room to the recovery room" with record profits of Y331bn ($2.7bn) on sales of Y6.1tn ($49.1bn). Group debt had fallen to $20.4bn. Incredibly, this was Nissan's first profit in four years and only its second since 1991. In October 2001 Renault and Nissan strengthened their alliance when Nissan acquired a 15% holding in the French company, while Renault exercised options to increase its stake in its Japanese partner to 44%. However both companies denied any intentions to merge completely.

In 2002 the company agreed to form a joint venture with China's third-largest motor manufacturer, state-run DongFeng, paying just over $1bn for a 50% stake in new company DongFeng Motor, which acquired all the existing operations of the Chinese business. The deal was the biggest foreign investment in a state-run Chinese company since Beijing joined the World Trade Organisation in 2001. In 2003 the group announced the recall of 2.55m cars worldwide as a result of a mechanical fault, the largest recall by a Japanese carmaker. The fault, which could cause cars to stall, was not dangerous, but was embarrassing given Nissan's reputation for high quality engineering. The cost of the recall, estimated at around Y16bn, was already covered by provisions in Nissan's accounts. In a 2004 Nikkei newspaper survey of senior Japanese executives, Carlos Ghosn was voted the country's single most admired manager, ahead of Toyota's Hiroshi Okuda and Canon's Fujio Mitarai, and the only foreigner in the top 20. In 2005, in an unprecedented move which says much for the increasing integration of Renault and Nissan, he succeeded Louis Schweitzer as CEO of Renault, while also retaining his position at Nissan.

In 2008, Nissan agreed a manufacturing alliance with Chrysler, which was initially seen as a first step to making the American company a third partner in the Renault-Nissan worldwide alliance. The companies were preparing to manufacturing each other's models from 2009. However, Chrysler's bankruptcy and subsequent takeover by Fiat put an end to all such ideas, and the partnership was abandoned. See full profile for current activities


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