110 + 10: Ghosn Does a 180

Nissan was doing well in the 1970s and early ’80s, second to Toyota in the U.S. and far ahead of other Japanese makers. But who knew, because its brand name here was Datsun?

Then, in 1982, for worldwide consistency, Nissan decided to jettison the successful Datsun brand in favor of its global name. That may be when its troubles began, at least in the U.S., though U.S. Nissan sales peaked at 831,000 in 1985 as its dealers slowly (and reluctantly) hoisted shiny new Nissan signs where “Datsun” used to rule.

Americans were generally aware of Datsun. It was more fun, less conservative than Toyota with a range of small sedans, wagons and pickups buoyed by a sexy sports car (240Z, then 260Z) and well-publicized motorsports success. Even actor/heartthrob Paul Newman, when not making movies and salad dressing, was racing and winning in Datsuns.

But what was a “Nissan?” Essentially all of that hard-won brand recognition and image was tossed out the window as Datsun cars, trucks and dealerships morphed into “Nissans.” Though the change may have been the right thing to do long-term, Nissan underestimated the impact of this transition in its most profitable market. Nissan U.S. sales slid to 622,000 by 1990, including some 24,000 Infiniti cars following the less-than-successful 1989 launch of that new luxury brand. By 1994, they had recovered to 774,000, including 51,000 Infinitis, but by 1998 were down to 622,000 again. Its home-market share, a heady 34 percent in 1974, had declined to less than 19 percent and its global share to just 4.9 percent from 6.6 in 1991, it had lost money in seven of those eight years, and its debt was a staggering $22 billion. Facing collapse, sorely needed a savior/partner to rescue its bacon.

“Nissan was always known for strong engineering,” says Michael Robinet, vice president global forecasting, CSM Worldwide. “[Their problem] was mostly a lack of innovative product and the slow launch of Infiniti vs. Lexus and Acura. There are three mainline Japanese — Toyota, Honda and Nissan — then some smaller players that tend to have more specialty niches. Nissan got caught between the bigger players and the niche players.”

Along came France’s Renault — after both Ford and DaimlerChrysler had pulled out of negotiations to purchase the company in March 1999 — which cut a deal to exchange $5.4 billion in cash for a 36.8 percent stake and sent Brazilianborn Executive Vice President Carlos Ghosn to Japan as Nissan CEO. Ghosn’s plan, unveiled that October, promised to restore profitability by revitalizing the product portfolio while reducing costs by more than $9 billion and debt to $6.4 billion by 2002. Three assembly and two powertrain plants in Japan would be closed, global headcount would be reduced by 21,000 (through attrition, early retirement, increased part-time employment and spin-off of non-core businesses) and key functions would be globalized.

Almost incredibly, Nissan turned profitable in 2000, reached 7.9 percent operating margin in 2001 and an industry-leading 10.8 percent in 2002. By 2003 (the company’s 70th anniversary), its U.S. market share was approaching 5 percent vs. 3.9 percent in 1998, while its fiscal year 2003 results marked the fourth straight year of record profits.

“They’ve done some unbelievable things in commonization,” Robinet says, “first in vehicles and structures and increasingly in engines, transmissions and common build processes. They took Renault and Nissan, two disparate companies, and brought them together in a platform sense — a stroke of genius. They have some of the leading high-volume platforms in the world today, they’re getting stronger, and they’re filling out their portfolio. And they’re not afraid to move into new markets. Renault is getting stronger in markets such as Iran; Nissan in markets such as China. They’re putting their money into the right places. “I think Nissan was smart to harken back to its roots of strong engineering and very strong powertrain, and what they did on top of that was more exciting styling. But I think the real splash is going to come on the luxury side, and many of those Infiniti vehicles will be on platforms manufactured in several locations, which will help their cost base. I would look for more Infiniti product, not only to be imported from Japan but also to be manufactured here.”