As the global vehicle manufacturing business suffers, Nissan’s light commercial vehicle division is bucking the trend, investing heavily in new plants and product programmes from North Africa to North America. Andy Palmer, the head of this business unit, explains how Nissan plans to leapfrog its rivals to become the number one LCV brand in the world
Nissan Motor’s light commercial vehicle (LCV) business has, over the past two years, steadily emerged as one of the firm’s most successful divisions, a far cry from earlier this decade when it was a chronic loss maker. In 2008, the company made LCVs a standalone global division, giving it highly ambitious profit, customer satisfaction and sales goals. Leading the unit is Andy Palmer, the Programme Director of the global LCV business unit (BU) and the President of Nissan Light Truck Company.
The first Nissan vehicle was in fact an LCV, the 1934 Datsun 13T, with Datsun trucks also the first models to be exported in 1958. In parts of the world such as southern Africa and Australia, the brand’s pickup trucks and cabover vans earned hard-won reputations as extremely tough workhorses, dating as far back as the 1960s. In Japan, meanwhile, the adoption of a unitised body in the production of the first-generation Caravan delivery van was revolutionary in 1973, while Nissan Diesel (since sold to Volvo Trucks) pushed equally hard into export markets throughout South East Asia in the 1980s and 1990s.
After the period of consolidation and targeted growth for the car unit that followed the creation of the Renault-Nissan alliance in the late 1990s, efforts are now being concentrated into making the global LCV BU a major force for growth. To get there, Nissan is taking a multi-pronged approach, with a network of alliances, a complex array of future products in all classes up to eight tonnes gross vehicle weight (GVW), and plans to become the leader by various definitions in each of the markets it has chosen to target. With those countries or regions already listed as Japan, South Africa, Russia, Mexico, India, China, Europe and America, it’s vital that the unit has strong, central leadership. Andy Palmer, who is based in Yokohama, Japan, believes Nissan’s globally focussed but regionally concentrated approach is key.
“The Nissan LCV BU committed to grow volumes to 434,000 units in fiscal year 2007, a 40 per cent increase on the 312,000 produced in 2004, and to double the consolidated operating profit (COP) margin to eight per cent in the same period,” he says. “Both targets were surpassed one year ahead of schedule, in fiscal year 2006, when Nissan LCV sold 490,000 units globally with a COP in excess of eight per cent.
“We’re aiming to achieve a leading position in the global LCV business by 2010. At present we have a significant presence in China, Japan, Europe and Mexico. We see great opportunities in America, where we plan to launch three new products in three years from 2010, in Russia, where we launched sales in September, and in India, where we have a strategic alliance with Ashok Leyland and where we will start LCV operations in 2010.”
According to Palmer, Nissan now covers over 73 per cent of global markets, if you include Nissan’s alliances with Mazda, Isuzu, Mitsubishi and, of course, its partnership with Renault. But of that remaining 27 per cent, a hugely tempting chunk is made up of the currently recessed but nevertheless giant American market.
“We have a production blueprint that can globalise functions to maximise efficiency and deliver greater value to the customer,” he says. “Earlier this year, we announced an investment of $118.5 million (£79.8 million) to convert and expand the Canton plant in Mississippi to an LCV plant.”
While Palmer is reluctant to be drawn on details of the new vehicles for North America, it’s clear that the NV2500 concept, due to be introduced at the Nissan Technical Center in Farmington Hills, Michigan, last December, provides some major clues about the first product. A full-sized van, the new model will challenge the long-time leaders in this segment, GM’s Chevrolet Express and GMC Savana twins, as well as the Dodge Sprinter and Ford Econoline. The potential is huge – even in the worst new-vehicle market since 1983, Ford, the sales leader, sold more than 8,000 units of the Econoline in October 2008 and just under 110,000 in the first ten months of the year.
While Nissan intends to go it alone in the American market, in other markets it continues to be something of a serial partner seeker. In Japan, its alliances include supplying Mitsubishi with a version of its AD Van at the contracted rate of 3,000 units per year. In return, Mitsubishi provides 4,000upa of its Town Box microvan rebadged as the Nissan Clipper Rio. Palmer insists that even at these levels, such relationships make economic sense, especially with the Japanese market still in contraction mode. Further, thanks to such relationships, Nissan is able to cherry pick in the most lucrative segments, while keeping spending low in areas where profits might otherwise be marginal. Other examples abound, especially in regions where Nissan has not been a major player in the past.
“We have leveraged a partnership with Volvo (Trucks) in the development of dealer networks in Europe. In the field of technology, we have a partnership with ZF for drivetrains and hybrid technology and with Cummins for powertrains,” says Palmer.
While Nissan’s approach to sharing technology and even manufacturing operations is flexible, its system also means that regional units provide facilities for product development, manufacturing and marketing support to the LCV BU in Japan.
“The LCV BUs across regions contribute in specific ways to the LCV business at Nissan,” he says. “The BU in North America is responsible for engineering, product planning, value chain management, sales and distribution as well as marketing and aftersales. The BU in Europe provides all these functions, barring distribution, whereas the BU in Japan provides all the functions of the North American BU as well as some production functions.
“We are led by the needs of the customer and our commitment to maximise efficiency at all levels. We view product development as a commitment to the customer to translate his or her requirements into a range of LCVs which are high on functionality and reliability, while making optimal use of new technology with designs based on easy adaptability and a human touch. Of course, this core principle manifests itself in various ways. At times it means that we develop a product like the Cabstar, which is a standardised approach in LDT trucks as they exist in Thailand, Mexico and Japan. On the other hand, the American market has very specific needs and LCVs will need entirely different configurations there.”
Another cornerstone of the strategy Palmer has been tasked to push forward is the continuation and expansion of alliances. But whereas this has often involved using such product sharing deals to enter segments and markets where Nissan was weak or absent, the emphasis is set to change over the medium to long term as the firm seeks to become the global leader in LCVs.
“Nissan will continue to seek OEM opportunities with a view to maximising value for its customers,” he says.
“Partnerships with Volvo in Europe, Isuzu and Mazda, constitute Nissan’s proactive OEM strategy. In the future, we aim to graduate from being an OEM net buyer to a net seller. In fiscal year 2007 we bought 76,067 units and sold 12,152.
In the same year, the LCV BU sold 519,703 units globally with a COP exceeding eight per cent. The NP300 pickup truck (also sold as the Frontier in selected markets) was the best-selling individual Nissan LCV with 71,678 units.
China was the market with the largest portion of LCV sales (151,088 units), followed by Japan (121,790 units). The various alliances and forthcoming production plants the world over clearly give Nissan something of a hedged bet for global LCV sales growth. And despite some dramatic falls in traditionally strong commercial vehicle markets, particularly North America and Western Europe in the latter half of 2008, Palmer remains optimistic.
“Our plans remain on target and our goals, which were very ambitious when we set them, are being reached,” says Palmer. “In fiscal year 2008, despite the huge amount of uncertainty that has affected so many markets, we’re confident we’ll reach 600,000 LCV sales. And if you look at where we were, a loss-making operation lacking direction and competitive product in the 1990s, our LCV business has now acquired a status of a major global breakthrough opportunity for Nissan. The LCV business unit has also over-achieved its eight per cent operating-margin milestone, and there’s no doubt now that it is firmly established as a pillar of our global business. We see a lot of growth ahead.”