Ghosn Taking Cost-Cutting to Paris

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Carlos Ghosn will take his no-nonsense management style back to Renault in May of 2005 - but in the meantime, he continues to set down lofty goals for Nissan, the Japanese automaker that he has led successfully for more than five years.

Nissan is again on track to meet the sales and financial goals set for the current fiscal year, which ends March 3. "I would say we are on track both on the global sales volume for the year and we are on track for the financial performance for the year," Ghosn said during a round table with reporters at the Mondial de l' Automobile in Paris last week. Ghosn added the first half of the year was "slightly softer" because Nissan had not launched any new products over the past six months.

Nissan's fortunes will shift for the better, however, with the introduction of several new products, including the Pathfinder sport-utility vehicle and the Frontier pickup truck in the U.S. and the introduction of more new vehicles in Japan and in Europe where the Japanese automaker hopes to make a better showing in the future.

Value up

Nissan does not plan to chase volume and said any growth must be profitable. Nonetheless, he also has set ambitious sales goals for Nissan. Nissan sales worldwide should reach 3.6 million units during the current fiscal year and grow to 4.2 million units between now and 2008, Ghosn said.

Ghosn said under the "Value Up" plan - the third three-year plan Ghosn has developed for the company since taking over as chief executive officer in 1999 - sales in new markets such as Russia, China and the Middle East will help the company reach its objectives. Nissan has developed a strong foothold in China; the demand for vehicles is growing rapidly in Russia , he noted as well. " China is important because it's a high-margin country still and because of the prospects for growth. This is also a market where the mix could become very rich," Ghosn said.

Ghosn also said he would like to see Nissan double its market share in the Middle East, where it now has about 16 percent of the market. Toyota, Nissan's archrival, is the market leader in the Middle East. Infiniti, Nissan's luxury brand, will also enter the South Korean market for the first time next year with the help of Samsung, a subsidiary of its partner Renault. The new Infiniti dealers in South Korea , where industry-wide sales are expected to top 1 million units annually, will have access to the full range of Infiniti products, Ghosn added.

The competition for sales around the world is intense, he acknowledged.

"We're not chasing volume for the sake of volume or chasing growth for the sake of growth," he said. "The problem in our industry is there are lots of people who don't make money and who don't want to get out," of particular segments, he noted.

Like other automakers, Nissan faces risks in different markets such as high incentives in the U.S., high prices for commodities such as steel all over the world and slower than anticipated economic growth in Europe and the U.S. "We're being realistic about what we can expect in Europe," he said. But he noted the company is launching several new products in Europe, starting with the introduction of the new Z Roadster and the Pathfinder, which Nissan said has been refined specifically for the European market. "We'll do better in the next two years," said Ghosn, who also noted that Nissan plans to start building a new vehicle, the Tone, at its plant in Sunderland, England, which is considered the most productive in Europe. Ghosn, however, noted customers care little about a company's productivity.

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I'm not a fan of Nissan, but I do like Ghosn.