Nissan Motor is studying the cost competitiveness of Chinese suppliers and exploring ways to apply their practices globally, as it aims to cut variable costs by ¥250bn (R30bn) in a broad efficiency drive, a senior executive said.
Tatsuzo Tomita, Nissan’s chief of total delivered cost transformation, said the Japanese carmaker was drawing lessons from its Chinese suppliers’ use of standard parts and their close collaboration with designers.
“We’ve gained access to Chinese-style ways of working, and my current challenge is figuring out how to apply those methods to parts for our current and upcoming vehicles,” Tomita told reporters at Nissan’s head office in Yokohama on Wednesday.
As part of its ongoing turnaround plan that includes cutting about 20,000 jobs and consolidating seven plants, Nissan is targeting ¥500bn of cost reductions by March 2027.
Half is expected to come from cuts to fixed costs and the remainder from slashing variable costs as it works to secure an operating profit and positive free cash flow in its automotive business by the financial year ending in March 2027.
Tomita said the company was not looking to shrink its supplier base, but to strengthen collaboration.
He noted Chinese suppliers were expanding globally, with operations in Hungary, Morocco and Turkey, and said Nissan was considering them as potential future partners in its international strategy.
While acknowledging the ¥250bn variable cost reduction target was “massive”, Tomita said it could be achievable if Nissan maintained its current momentum, which it had been building by sourcing thousands of ideas from employees.
The effects of the cost-saving measures were likely to materialise more widely by the end of the year or next year, as they differed from vehicle to vehicle, he added.
Nissan will close its design centres in California and Sao Paulo and scale back operations in London and Japan as part of a realignment of its global design organisation, the company said on Tuesday.
The changes, part of its broader “Re:Nissan” plan, will consolidate its design organisation into five hubs: Los Angeles, London, Shanghai, Tokyo and Japan’s Atsugi.
Nissan said its Los Angeles “Studio Six” would become its primary US design hub, while London would continue to support the carmaker’s Africa, Middle East, India, Europe and Oceania regions in collaboration with partner Renault.
The company did not disclose how many jobs would be affected.
Nissan CEO Ivan Espinosa, who took over in April, unveiled the “Re:Nissan” turnaround plan in May to restore profitability. It included measures such as cutting global production capacity to 2.5-million vehicles from 3.5-million.
Reuters
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