Nissan Motor Co. Ltd. 2002 Case

Nissan Motor Co., Ltd.

Company Profile

Reference Code: 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A

Publication Date: Nov 2007

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Nissan Motor Co., Ltd. 4D7FBDA0-F0B2-4399-B00D-A6C745AE881A

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Nissan Motor Co., Ltd.Table of Contents

TABLE OF CONTENTS

Facts & Overview........................................................... 4

Business Description.................................................... 5

History ............................................................................ 6

Major Products & Services ........................................... 9

Revenue Analysis........................................................ 10

Key Employees ............................................................ 11

Key Employee Biographies ........................................ 12

Locations & Subsidiaries............................................ 15

Company View ............................................................. 16

SWOT Analysis ............................................................ 20

Top Competitors .......................................................... 25




Nissan Motor Co., Ltd.Company Overview

COMPANY OVERVIEW

Nissan Motor Co (Nissan) is engaged in the planning, developing, manufacturing andselling of passenger automobiles, automobile parts, and forklifts. The companyoperates in the Japan, North America and Europe. It is headquartered in Tokyo, Japanand employs about 186,340 people.

The company recorded revenues of JPY10,468.6 billion (approximately $88.8 billion)during the fiscal year ended March 2007, an increase of 11% over 2006. Theoperating profit of the company was JPY776.9 billion (approximately $6.6 billion)during fiscal year 2007, a decrease of 10.9% over 2006. The net profit was JPY460.8billion (approximately $3.9 billion) in fiscal year 2007, a decrease of 11.1% over 2006.

KEY FACTS

Head Office 17-1, Ginza 6-chomeChuo-kuTokyo 104 8023JPN

Phone 81 3 3543 5523Fax 81 3 5565 2228Web Address http://www.nissan-global.comTicker Tokyo: 7201# Employees 186,336Turnover (JPY Mn) 10,468,600Financial Year End March




http://www.nissan-global.com

Nissan Motor Co., Ltd.Business Description

BUSINESS DESCRIPTION

Nissan Motor (Nissan) and its consolidated subsidiaries are primarily engaged in themanufacture and sales of products in the automobile segment. The company alsoprovides financial services. Nissan operates in Japan, the US, Canada, Mexico,Australia, New Zealand, South Africa, Middle East and Asia.

The company organizes its operations into two reportable segments: automobile andsales financing.

Nissan’s automobile segment is engaged in the manufacturing and sale of passengercars, trucks, SUVs (sports utility vehicles), light utility vehicles and mini vans. Some ofthe company’s passenger car models include Maxima, Sentra, Altima, Versa, ZRoadstar and Z Coupe. Some its truck models are Quest, Armada, Pathfinder,Murand and Xterra.

The company’s sales financing segment provides financial products and servicessuch as auto loans, car leasing, credit cards, car rental and car insurance through itswholly owned subsidiary, Nissan Financial Services (NFS). These financial servicesare provided primarily in Japan and North America. NFS has a wholly ownedconsolidated subsidiary called Nissan Plazasol, which intermediates the sale of usedcars; and a non-consolidated subsidiary, Nissan Rent-A-Car Shizuoka, a car-rentalcompany.

The company has a global partnership with Renault for automobile manufacturing andsales; as well as for automotive financing. Renault holds a 44.3% stake in Nissan,while Nissan owns 15% of Renault shares. The alliance jointly operates RenaultNissan, in which both Nissan and Renault have a 50% interest. It also operates RNPO(Renault-Nissan Purchasing Organization) and RNIS (Renault-Nissan InformationServices).




Nissan Motor Co., Ltd.History

HISTORY

Nissan’s predecessor Jidosha Seizo was established in Yokohama in 1933. Thecompany changed its name to Nissan Motor Co., Ltd in 1934. Nissan manufactured itsfirst fully assembled car in 1935.

Nissan acquired a stake in Minsei Diesel in 1950. It entered into a technological co-operation agreement with Austin Motors in 1952. The company exported its firstpassenger cars to the US in 1958. In the following year, the company commencedproduction in its first overseas factory in Taiwan.

The company established the Nissan Motor Corporation in the US in 1960. In thefollowing year, the company established Nissan Mexicana in Mexico and commencedproduction in 1966.

Nissan developed and manufactured the rocket engine and launch vehicle for Japan’sfirst satellite, the Lambda 4S-5, which was launched in 1970. The companyestablished the Nissan Science Foundation in 1974 and the Nissan DesignInternational in the US in 1979. The company also established the Nissan MotorManufacturing Corporation in the US in 1983.

The company began marketing its vehicles worldwide under the Nissan name in 1981.Nissan Research & Development was established in the US in 1983. The companyentered into an agreement with Volkswagen in 1984 to produce and sell the Santanabrand of vehicles. Later that year the company acquired an equity interest in YulonMotor in Taiwan.

Nissan Europe in the Netherlands began operations in 1990. Nissan North Americacommenced operations later that year.

Nissan acquired a stake in Siam Motors in Thailand in 1990. In 1991, the companyentered into a joint venture with Hitachi and established Xanavi InformaticsCorporation. The company began production in its Kyushu plant in 1992. In the sameyear, the company established Nissan Casting Australia and Nissan Design Europe inGermany.

Nissan Motor (China) was established in Hong Kong, in 1994. Nissan MotorManufacturing Corporation U.S.A. commenced production in 1997.

Nissan and Renault signed a global partnership in 1999, whereby Renault investedJPY643 billion (approximately $5.4 billion) in Nissan, by taking a 36.8% equity stake inNissan Motor, a 22.5% equity stake in Nissan Diesel.





Nissan Motor Manufacturing Corporation U.S.A. was merged into Nissan NorthAmerica in 2000.

Nissan and Suzuki Motor signed an agreement through which Suzuki supplied mini-vehicles to Nissan on an OEM bases in 2001.

Nissan entered mini-car market by Moco and also opened European design centre inLondon in 2002.

Nissan and Dongfeng established Dongfeng Motor in China in 2003. In the same year,the company and Nissan Diesel established joint small truck company. Nissan MotorAcceptance Corporation (NMAC) relocated to a 268,000 square foot customer servicecenter in Irving, Texas in 2003, as part of the expansion of its operations in NorthAmerica.

Renault and Nissan’s common commercial organizations in Europe were establishedin Slovenia and Croatia respectively in 2004. In the same year, Renault Kangoo CKDassembly began in Malaysia with the support of a local partner.

Renault and Nissan’s common commercial organization in Europe was established inPortugal in 2005. Later that year Renault and Nissan jointly developed a new commonnavigation and communication system.

Nissan Korea was established and introduced five Infiniti models to the marketstarting in mid 2005. In the same year, Renault Nissan Bulgaria was established.

Nissan developed a distance control assist system in March 2006.

In July 2006, Nissan set up a new parts exporting base in Thailand. In the samemonth, Nissan developed a light duty truck platform.

Nissan launched a vehicle navigation service with net access in September 2006.

The ’2007 Nissan Altima Hybrid’, Nissan’s first entry into the hybrid gasoline/electricvehicle segment, made its North American debut at the 2007 Model Orange CountyAuto Show in California, during October 2006.

Nissan opened its megastore for used-cars, ’Carminal Tokyo’, and a brand newdealership called ’Tokyo Nissan Shinsha no Hiroba’ in Murayama in December 2006.

Nissan and Renault Trucks signed a distribution agreement for the Renault Maxitylight duty vehicle in January 2007.





Nissan and Mitsubishi Motors agreed to expand their current business collaborationby enhancing the OEM (Original Equipment Manufacturing) contract scope in April2007.

Nissan and Dongfeng announced to reinforce their light commercial vehicle (LCV)business in the Chinese market through the joint venture with Dongfeng MotorCompany in March 2007.

Nissan, NEC Corporation, and its subsidiary, NEC TOKIN signed an agreement toestablish a joint-venture company, to focus on lithium-ion battery business for wide-scale automotive application in April 2007.

Nissan reached an agreement to sell the Shinkoyasu property to three privatecompanies in July 2007.

Alain Dassas was appointed as the company’s Chief Financial Officer in September2007. In the same month, Nissan concluded an agreement, through its subsidiary,Nissan Forklift Europe, with the shareholders of Atlet to acquire a 100% stake in theSwedish warehouse equipment manufacturer.

Nissan acquired ATLET (a company engaged in the development, manufacturing andsales of warehouse material handling equipment) through its subsidiary, NissanForklift Europe in October 2007.

Hinduja Group’s flagship Ashok Leyland and Nissan signed a binding Master Co-Operation Agreement (MCA) for the formation of three joint venture companiessupporting the light commercial vehicle (LCV) business in October 2007.




Nissan Motor Co., Ltd.Major Products & Services

MAJOR PRODUCTS & SERVICES

Nissan and its consolidated subsidiaries are engaged in the manufacturing and salesof automobiles; and the provision of sales financing services. The company’s keyproducts and services include the following:

Automobile Products:

Cars:

MaximaSentraAltimaVersaZ RoadstarZ coupeInfiniti

Trucks:

QuestArmadaPath finderMurandXterra

Sport utility vehicles and mini vans:

TitanFrontier

Financial products and services:

Auto loansCar leasingCredit cardsCar rental Car insurance




Nissan Motor Co., Ltd.Revenue Analysis

REVENUE ANALYSIS

The company recorded revenues of JPY10,468,583 million (approximately $88,784.1million) during the fiscal year ended March 2007, an increase of 11% over 2006. Forthe fiscal year 2007, North America, the company’s largest geographic market,accounted for 43.5% of the total revenues.

Nissan Motor generates revenues through two business divisions: automobiles(93.5% of the total revenues during fiscal year 2007) and sales financing (6.5% of thetotal revenues).

Revenues by Division

During the fiscal year 2007, the automobile division recorded revenues ofJPY9,790,484 million (approximately $83,033.1 million), an increase of 10.1% over2006.

The sales financing division recorded revenues of JPY678,099 million (approximately$5,751 million) in fiscal year 2007, an increase of 27.2% over 2006.

Revenues by Geography

North America, Nissan’s largest geographical market, accounted for 43.5% of the totalrevenues in the fiscal year 2007. Revenues from North America reachedJPY4,550,498 million (approximately $38,592.8 million) in 2007, an increase of 11%over 2006.

Japan accounted for 23.7% of the total revenues in the fiscal year 2007. Revenuesfrom Japan reached JPY2,478,549 million (approximately $21,020.6 million) in 2007,a decrease of 7.3% over 2006.

Europe accounted for 19.5% of the total revenues in the fiscal year 2007. Revenuesfrom Europe reached JPY2,038,026 million (approximately $17,284.5 million) in 2007,an increase of 44.1% over 2006.

Other foreign countries accounted for 13.4% of the total revenues in the fiscal year2007. Revenues from other foreign countries reached JPY1,401,510 million(approximately $11,886.2 million) in 2007, an increase of 13.2% over 2006.




Nissan Motor Co., Ltd.Key Employees

KEY EMPLOYEES

Name Job Title Board Total Annual Comp.Carlos Ghosn Chief Executive Officer

(Since: 2005)Executive Board -

Itaru Koeda Co-Chairman and Executive Vice President(Since: 2003)

Executive Board -

Toshiyuki Shiga Chief Operating Officer Executive Board -Hiroto Saikawa Executive Vice President, American

OperationsExecutive Board -

Mitsuhiko Yamashita Executive Vice President, Research and Development

Executive Board -

Carlos Tavares Executive Vice President Executive Board -Hidetoshi Imazu Executive Vice President Executive Board -Tadao Takahashi Vice Chairman Executive Board -Shemaya Levy Director Non Executive Board -Patrick Pelata Director Non Executive Board -Shiro Nakamura Senior Vice President Senior Management -Kazuhiko Toida Senior Vice President Senior Management -Kimiyasu Nakamura Senior Vice President Senior Management -Junichi Endo Senior Vice President Senior Management -Hitoshi Kawaguchi Senior Vice President Senior Management -Minoru Shinohara Senior Vice President Senior Management -Yo Usuba Senior Vice President Senior Management -Shigeo Shingyoji Senior Vice President Senior Management -Yoshiaki Watanabe Senior Vice President Senior Management -Colin Dodge Senior Vice President Senior Management -




Nissan Motor Co., Ltd.Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Carlos Ghosn

Board: Executive BoardJob Title: Chief Executive OfficerSince: 2005

Mr. Ghosn has been President and Chief Executive Officer of Nissan since 2005. Hejoined the company in 1999 as Chief Operating Officer and he became President in2000 and was named Chief Executive Officer in 2001. Prior to joining Nissan, Mr.Ghosn served as Executive Vice President of the Renault Group from 1996. Before hejoined Renault, he had worked with Michelin for 18 years as Chairman and ChiefExecutive Officer. Previously, he also worked as the Chief Operating Officer ofMichelin’s South American activities based in Brazil; he also worked as Head ofresearch and development for industrial tires in Ladoux, France; and as plantmanager in Le Puy, France. He is also a Directors of Alcoa.

Itaru Koeda

Board: Executive BoardJob Title: Co-Chairman and Executive Vice PresidentSince: 2003

Mr. Koeda has been Co-Chairman and Executive Vice President of Nissan since2003. Since joining Nissan in 1965, he has held various positions in productionengineering, corporate planning and human resources development departments. Mr.Koeda has been a Director since 1993. He also served as Managing Director forvarious purchasing functions and the department of affiliated companies.

Mitsuhiko Yamashita

Board: Executive BoardJob Title: Executive Vice President, Research and Development

Mr. Yamashita serves as Executive Vice President, Research and Development ofNissan. He served as Senior Vice President in charge of the environmental and safetyengineering, technology planning, materials and measurement engineeringdepartments. He also oversaw the advanced vehicle engineering and electronicsengineering divisions. Since joining Nissan in 1979, Mr. Yamashita has held variouspositions in vehicle design research & development and engineering. He transferredto Nissan Technical Center North America, Nissan’s engineering arm, in 2002. There,





he was responsible for all of Nissan’s vehicle engineering and developmentoperations in Michigan, California, Arizona and Mexico.

Carlos Tavares

Board: Executive BoardJob Title: Executive Vice President

Mr. Tavares has been Executive Vice President of Nissan since 2005. Before joininghis current role in 2005, he was Vice President of Nissan’s product strategy andproduct planning divisions. Mr. Tavares joined Nissan Motor in 2004 after 23 yearswith Renault. At Renault, he held various positions in engineering, including platformlayout engineer of CLIO II and Director of the C-segment program, Megane II &Scenic II range. He also worked as General Manager of layout in advancedengineering.

Tadao Takahashi

Board: Executive BoardJob Title: Vice Chairman

Mr. Takahashi serves as Vice Chairman of Nissan. He is currently an Executive VicePresident responsible for manufacturing, vehicle and power train productionengineering, supply chain management and information systems for Nissan Motor. Heis also Director of the company. Prior to assuming his current position in 2002, Mr.Takahashi was Senior Vice President in charge of the manufacturing and industrialengineering division for the Oppama, Tochigi and Kyushu plants. Since joining Nissanin 1968, Mr. Takahashi has held various positions in engineering departments. In1998, he assumed responsibility for the Yokohama, Fuji, Oppama, Tochigi and Iwakiplants and also supervised the production control and Nissan Production Waypromotion departments.

Patrick Pelata

Board: Non Executive BoardJob Title: Director

Mr. Pelata serves as the Director of Nissan. He joined Nissan in 1999, and isresponsible for product planning and strategy. Before joining Nissan, Mr. Pelata wasExecutive Vice President of Renault in charge of vehicle development. He joinedRenault in 1984, and later was responsible for the design of the Renault Twingochassis in 1988 and 1993. In 1996, Mr. Pelata was appointed vice president in chargeof chassis equipment engineering, and two years later, he was named Senior VicePresident for vehicle development. Mr. Pelata graduated from the Ecole





Polytechnique, the Ecole Nationale des Ponts et chaussees and the Ecole desHautes Etudes en Sciences Sociales.

Shiro Nakamura

Board: Senior ManagementJob Title: Senior Vice President

Mr. Nakamura serves as the Senior Vice President of Nissan. He also works as thePresident for both Nissan Design America and Nissan Design Europe. Prior to joiningNissan in 1999, Mr. Nakamura held various senior level positions with Isuzu Motorsfor 25 years and oversaw the design development of models such as Vehicross andGemini. In 1985, he worked in General Motors in the Advanced Design Studio inMichigan.




Nissan Motor Co., Ltd.Locations & Subsidiaries

LOCATIONS & SUBSIDIARIES

Nissan North America 333 Commerce St. NashvilleTennessee 37201 3300USA

Nissan Europe Parc de Pissaloup13 Avenue Jean d’AlembertB.P. 12378194 Trappes CedexFRA

Nissan (China) Investment Rm. 1318, South TowerBeijing Kerry Centre1 Guang Hua RoadChao Yang DistrictBeijingCHN

Nissan South East Asia 15th Floor, Nantawan Building161 Ratchadamri RoadLumpiniPathumwan Bangkok10330THA

Dongfeng Motor No.29 Baiye RoadWuhan Economic and Technological Develop-ment ZoneWuhanHubeiCHN

Yulon Nissan Motor 39-2 Po Kung KengShi Hu TsuenSan YiMiao Li HsienTWN

Nissan Middle East Jebel AliDubaiARE

Nissan Motor Indonesia Kawasan Industri Kota Bukit Indahblock ALot 1 14Purwakarta 41181Jawa BaratIDN

Tan Chong Motor Assemblies 249 Jalan Segambut51200 Kuala LumpurMYS

Nissan Motor Philippines Barangay Pulong Sta. CruzSta. Rosa4026 LagunaPHL




Nissan Motor Co., Ltd.Company View

COMPANY VIEW

A statement by Carlos Ghosn, President and Chief Executive Officer of Nissan isgiven below. The statement has been taken from the company’s 2007 annual report.

The sole purpose of a public company is to create growing sustainable value. AtNissan, we are totally focused on this purpose.

However, for the first time in eight years, we missed our performance objectives infiscal 2006. As a result, we have extended the delivery period for all Nissan Value-Upcommitments by one year.

The stock market recognized this shortfall and our share price mirrored ourperformance. However, we believe we are well below our potential.

Fiscal 2006

This past year, all the headwinds we anticipated materialized and were more severethan expected. This happened the lowest point of our product cycle. Although wesuccessfully launched new models, such as the Altima and G35, they were introducedlate in the fiscal year and did not lead to overall annual volume growth. And the salesdecline in our existing models offset these successful launches. In addition, our short-term profit potential was offset by our heavy investments for the future.

In order to re-boost our profitability, we have implemented several measures in Japan,U.S., Europe, and South Africa to address various issues including productioncapacity, dealer networks, and human resources. Yet, it is important to understandhow our situation today is different from 1999, when Nissan underwent a majorrecovery. Today, we are fine-tuning our operations in order to boost our performance.

Progress toward long-term value creation

Addressing our short-term issues is important, but we also believe it is important toachieve long-term profitable growth that is measurable in the context of a solid long-term plan.

In our long-term planning, the priority is to maximize free cash flow. The key driverswill be top-line growth, profitability, future investment and economies of scale throughthe Alliance. We have made significant progress in each area as shown below.

The first driver of top-line growth will come from our future product pipeline andgeographical expansion.





Once we complete the 28 model launches for Nissan Value-Up this year, we willintroduce over 33 new products during the next three years. As we embark on thisproduct offensive, we are focused on ’smoothing out’ the product-launch cadence inorder to avoid a new-product drought, such as those we experienced in 2005 and2006. This should reduce the likelihood of profit fluctuations and increase thepossibility for sustainable growth.

Regarding geographical expansion, one of our breakthroughs under Nissan-Value Up,we have successfully expanded our geographic presence in emerging markets asevidenced by the recent partnership with Renault and Mahindra in India. We expectsignificant growth in these markets.

Infiniti, another breakthrough, has also been successful in accelerating itsgeographical expansion. After its introduction in Korea in 2005 and Russia in 2006,Infiniti will enter the Chinese and Ukrainian markets in 2007 and during 2008 extendacross Western Europe.

Top-line growth must be achieved with profitability. Growing volumes without anappropriate contribution to profit does not make good business sense. Profit is alsokey to maximizing cash flow. In this regard, brand and product value are crucial.Several third-party non-financial leading indicators have exhibited our improvement inbrand and product value.

J. D. Power and Associates APEAL Study in the U.S. measures owner delight with thedesign, content, layout and performance of their new vehicles. In the 2006 survey,Nissan and Infiniti were the segment leaders in five out of nineteen categories. Nissanhas three segment-leading models, more vehicles than any other brand; Murano,Titan, and Armada. The Infiniti QX56 and M ranked at the top of their respectivesegments.

In a recent text, Consumer Reports, an influential magazine for new car buyers in theU.S., ranked our new Altima near the top, as it tied for the numberone vehicle in thefamily sedan segment. And in Consumer Reports’ ’Ten best cars in America,’ Infiniti’sG35 and M were both recognized as the top picks for safety and reliability in theirrespective categories.

Although improvement in these indicators is not immediately reflected in our financialresults, this is an engine of our profitable growth for the future. There is a directcorrelation between customer satisfaction and profits.

But sustaining profits means preparing for the future today. We are investingmassively, especially in R&D. Since 1999, our annual R&D expenditures have





doubled and will come to nearly JPY500 billion in fiscal 2007. And through theAlliance, we now have extensive collaboration with Renault’s R&D.

Our most urgent technical challenge today is to meet society’s environmentalexpectations. That’s why 40 percent of our budget for advanced engineering isdevoted to the Nissan Green Program 2010, our five-year environmental blueprint.

For our industry, environmental sustainability represents the biggest engineeringchallenge. And no matter what you may hear or read, there is no silver bullet and noquick fix. In this race, the finish line is nowhere in sight. So along with Renault, we arepursuing every possible avenue of environmental progress - from hybrids to fuel-cellsto electric and clean diesels.

In April, we announced that Nissan will introduce a clean-diesel passenger car for allfifty states in the U.S. in 2010. We will launch a Nissan Maxima powered by a clean-diesel engine co-developed by Nissan and Renault.

A focused technology strategy will once again be a pillar of Nissan’s competitivestrength and the core of our brand identity.

Our alliance with Renault, the last driver of profitable growth, is another pillar of futurestrength. This model is unique and although not widely understood, its effectiveness isunparalleled in the automotive industry.

Together, we now rank fourth in sales volume and second in total profitability in theglobal industry. We share platforms, technologies and best practices in order toimprove our investment efficiency. And we continue to achieve greater purchasingsynergies each year.

Our collaboration in R&D allows us to cover every potential avenue of environmentalprogress. Together, we advance on all fronts.

As for purchasing, the Alliance has supported our breakthrough to develop newsupply sources in ’Leading Competitive Countries,’ especially in Eastern Europe. Wewill also accelerate progress in India with the Alliance.

There are still more areas of cooperation that have yet to be realized.

Outlook

In fiscal year 2007, we will launch 11 new products globally. The most important ofthese introductions will be the five models for the U.S. We will launch an all-newversion of the Altima coupe, an all-new version of the Infiniti G37 coupe, the all-newcompact crossover Rogue, the new compact luxury crossover Infiniti EX, and an all-





new version of the Murano. Although we will again face a challenging environment, Ibelieve that we will get back on track in terms of profit growth with these new models.

Long-term value creation

Despite our commitment to long-term value creation, in recent years, our market-adjusted total return to shareholders has been negative. In addition, our key valuationmultiples, including PER, have been lower than our main competitors. Of course,multiples are only rough estimates and the differences may be attributed to variousfactors, including accounting differences. However, given the size of this gap to ourcompetitors, it’s obvious that the market is discounting the value of Nissan.

Based on our analysis, a significant part of this gap is due to investor perceptionsregarding our long-term performance. To a lesser extent, our recent short-termperformance has also contributed to this gap. Since the two perceptions are stronglyinterrelated, our weak short-term performance has negatively influenced perceptionsregarding the viability of our long-term performance.

In order to close this gap, we must first deliver strong short-term results. And we mustdo this without being short-term oriented because the market always rewardscompanies that perform over the long-term. When we can demonstrate strongshortterm performance, the long-term performance perceptions should improve. Whatwill close it is consistently delivering strong short-term results.

Of course, we will not stop there. We will further improve perceptions of our long-termpotential via transparent investor communications. After we successfully putourselves on a solid track of profitable growth, investors’ desires for moretransparency increased significantly. They want to know more about our futurestrategy and vision and have a better understanding of how we will deliver our plans.

Performance and transparency make for credibility and that is what it takes toconvince the market of our future potential. In this uncertain business environment, acompany is required to not only consistently deliver strong performance, but alsocommunicate to the market in a transparent manner.

A company cannot completely avoid all the ups and downs in its performance. But itshould learn from past mistakes and never make them twice; this behavior is part ofNissan’s DNA. We are committed to gaining the trust of the market and deliveringsuperior performance.




Nissan Motor Co., Ltd.SWOT Analysis

SWOT ANALYSIS

Nissan is one of the leading automotive brands in the world. The company has a widegeographic base. It has operations in various regions including Japan, the US,Canada, Mexico, Australia, New Zealand, South Africa, Middle East and Asia. Inaddition, the group is well diversified in terms of revenue generation from thesegeographies. The wide geographical reach of the company proves to be strength as itaids in catering to different markets and reap the benefits of these emerging markets.However, the company is threatened by rising raw material prices, which couldadversely impact its operating margins.

Strengths

Strong brand name

Nissan is one of the leading automotive brands in the world. Some of the company’spassenger car brands include Maxima, Sentra, Altima, Versa, Z Roadstar and ZCoupe. The truck models of the company include brands like Quest, Armada,Pathfinder, Murand and Xterra.

In the J D Power and Associates APEAL Study in the US in 2006, Nissan was thesegment leader in five out of nineteen categories. Also, a magazine for new carbuyers in the US ranked Nissan’s new Altima near the top in the family sedansegment. Also, Infiniti’s G35 and M were recognized as the top picks for safety andreliability in their respective categories in the survey for the ’Ten best cars in America’.

Nissan’s brand strength enables the company to gain investors confidence and alsoprovides it with a competitive advantage.

Strengths WeaknessesStrong brand name

Wide geographic base

Partnership with Renault

Robust revenue growth

Declining profitability

Weak performance in the domestic market

Opportunities ThreatsAcquisition of ATLET

Strategic initiatives

Increasing demand for hybrid cars

Opportunities in India and China

Rising raw material prices

ELV directive

Tightening emission standards





Wide geographic base

The company has a wide geographic base. It has operations in various regionsincluding Japan, the US, Canada, Mexico, Australia, New Zealand, South Africa,Middle East and Asia. In addition, the group is well diversified in terms of revenuegeneration from these geographies. For instance, in 2007 the group generated 43.5%of its total revenues from North America, 23.7% from Japan, 19.5% from Europe and13.4% from other foreign countries. The wide geographical reach of the companyproves to be strength as it aids in catering to different markets and reap the benefits ofthe emerging markets.

Partnership with Renault

The company has a global partnership with Renault for automobile manufacturing andsales; as well as for automotive financing. Renault holds a 44.3% stake in Nissan,while Nissan owns 15% of Renault shares. The alliance jointly operates RenaultNissan, in which both Nissan and Renault have a 50% interest. It also operates RNPO(Renault-Nissan Purchasing Organization) and RNIS (Renault-Nissan InformationServices). Both the companies share platforms, technologies and best practices.Together, they rank fourth in sales volume and second in total profitability in the globalindustry. Furthermore, the alliance has taken a number of strategic initiatives in orderto fuel its performance. For instance in February 2007, Renault and Nissan togetherwith Mahindra, announced to build a plant in Chennai, India that would open in 2009,with a planned capacity of 400,000 units. Further in July 2007 Nissan began the salesof the Nissan Aprio, a subcompact car for the Mexican market based on the RenaultLogan, built in the Renault passenger car plant in Brazil. The alliance with Renault is astrong driver of growth for Nissan which would enhance the market position andprofitability of the company.

Robust revenue growth

The company recorded a robust revenue growth rate over the last few years. Therevenues of the company increased at a CAGR of 12% during 2004-2007 to reachJPY10,468,583 million (approximately $88,784.1 million) in 2007. The company’srobust revenue growth, driven by increase in sales volume, adds to its bargainingpower.

Weaknesses

Declining profitability

In spite of recording a robust growth in revenues, the profits of the company havebeen declining over the years. The operating profit of the company declined at aCAGR of 2% during 2004-2007 to reach JPY776.9 billion (approximately $6.6 billion)





in 2007. Similarly the net profit of the company declined at a CAGR of 3% during2004-2007 to reach JPY460.8 billion (approximately $3.9 billion) in 2007.Furthermore, the net profit margin declined from 6.7% in 2004 to 4.4% in 2007.Declining profitability implies ineffective cost management, and could adverselyimpact availability of resources to pursue growth plans.

Weak performance in the domestic market

Nissan has recorded a weak performance in Japan, its domestic market in fiscal 2007.Revenues from Japan reached JPY2,478,549 million (approximately $21,020.6million) in 2007, a decrease of 7.3% over 2006. Furthermore, the operating profit fromJapan was recorded at JPY270.6 billion (approximately $2.3 billion) in 2007, adecrease of 31% over 2006. This was primarily due to the decrease in overallvolumes in Japan. Weak performance in the domestic market would drastically affectthe overall performance of the company.

Opportunities

Acquisition of ATLET

Nissan acquired ATLET, a company engaged in the development, manufacturing andsales of warehouse material handling equipment, through its subsidiary, NissanForklift Europe in October 2007. Nissan Forklift’s key markets include Europe, the US,Japan and other global markets. ATLET has a strong presence in Europe, Nissan’smain market, and is also experiencing growth in emerging markets. Post merger thecompanies would produce more than 36,500 units worldwide with an annual turnoverof €858 million. The acquisition of ATLET would thus further enhance the top line ofthe company.

Strategic initiatives

Nissan has entered into a number of strategic initiatives in the recent past. Forinstance, in October 2007, Nissan and Hinduja Group’s flagship Ashok Leylandsigned a binding Master Co-Operation Agreement (MCA) for the formation of threejoint venture companies supporting the light commercial vehicle (LCV) business.Earlier in April 2007, Nissan, NEC Corporation, and its subsidiary, NEC TOKIN signedan agreement to establish a joint-venture company, to focus on lithium-ion batterybusiness for wide-scale automotive application. Also, in March 2007, Nissan andDongfeng announced to reinforce their light commercial vehicle (LCV) business in theChinese market through the joint venture with Dongfeng Motor Company. Previously,in January 2007, Nissan and Renault Trucks signed a distribution agreement for theRenault Maxity light duty vehicle. Strategic initiatives such as these would further fuelthe market position of the company and in turn enhance its profitability.





Increasing demand for hybrid cars

Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach 4.5million units in 2013. Rising energy costs and increased emissions regulations arelikely to increase demand for HEVs. The US is expected to experience the highestlevel of demand for HEVs, estimated at two million units in 2013. Hybrid engines aremore fuel efficient and less polluting than conventional gasoline and diesel engines.With the all-new 2007 Nissan Altima Hybrid, Nissan’s first entry into the hybridgasoline/electric vehicle segment, Nissan is building up its competency inmanufacturing hybrid vehicles. The company is therefore well positioned to exploit thegrowing demand for hybrid cars.

Opportunities in India and China

China and India are expected to drive global demand for light vehicles through muchof this decade. Light vehicle production in China is expected to increase from 4.3million units in 2005 to 7.7 million units in 2010 while light vehicle production in India isforecast to increase from 1.4 million units to 2.5 million units during the same period.The company is taking various steps in order to expand its presence in theseeconomies. For instance, in February 2007, Nissan and Renault together withMahindra, announced to build a plant in Chennai, India that would open in 2009, witha planned capacity of 400,000 units. Also, in China the company has invested $1.6billion since 2003 in partnership with Dongfeng, with recent investments in a newengine plant and a new R&D center. The company can thus fuel its top line byleveraging its strong presence in India and China.

Threats

Rising raw material prices

The price of raw materials used by Nissan namely steel, aluminum, paints, plasticsand zinc has been increasing in recent times. For instance, For instance, the price ofcold rolled steel coil rose from $613 per ton in January 2006 to $696 per ton in May2007. With the merger of Arcelor and Mittal Steel, there is possibility of furtherconsolidation in the industry leading to increase in prices. Also, the increase in thecrude oil prices from $60 per barrel in October 2006 to $95 per barrel in November2007 has also affected prices of plastic materials used extensively in the automotiveindustry. In addition, the prices of important metals used by the company have shownincrease in their prices. Zinc prices are expected to average $3,150 per ton in 2007,up from $1,385 per ton in 2005. Aluminum prices, meanwhile, are expected toaverage $2,500 per ton in 2007, up from $1,900 per ton in 2005. Rising raw materialprices are likely to negatively affect the operating margins of the company.





ELV directive

Japan enacted the Automobile Recycling Law in July 2002, which requiredmanufacturers to take back air bags, fluorocarbon and shredder residue derived fromend-of-life vehicles (ELV). The law has become effective from 2005. Broadly the ELVdirective makes vehicle manufacturers responsible for taking back end-of-life vehiclesoffered for sale after July 2002 for dismantling and recycling.

Although this law was enacted in Japan, they have been adopted by Europe.Similarly, manufacturers in the Europe must not use specified hazardous materials invehicles offered for sale in the European Union after July 2003.The regulation alsospecifies that vehicle parts used in new vehicle sold in the European Union afterDecember 2008, must be designed to be re-usable and recoverable. Also, Taiwan,Korea and China have plans to implement automobile recycling laws in the nearfuture, following the regulations established by the European Union and Japan. ELVregulations would impose additional costs on the company, which could adverselyaffect its margins.

Tightening emission standards

The emission standard in the automobile industry which prescribes the norms forengine standards has been changing rapidly and in recent times different countriesare coming out with new emission standards. For instance, in 2005, the EuropeanUnion created a new emission standard (Euro5) which decreases the emission limitsfor gasoline vehicles and diesel vehicles as compared to Euro4 level and becomingeffective from 2009. Similarly, during 2005 various states in the US adopted similarstandards known as Zero Emission Vehicle (ZEV) regulation which also becomeseffective from 2009. This trend was followed by the developing countries as well.Consequently, China, South Korea and other Asian countries have come out newemission regulations to be effective from 2007. Tightening emission would requireNissan to come out with engines which conform to these regulations and wouldincrease its manufacturing cost.




Nissan Motor Co., Ltd.Top Competitors

TOP COMPETITORS

Audi AGBayerische Motoren Werke AGBrunswick CorporationCrown Equipment CorporationCummins, Inc.Daihatsu Motor Co.DaimlerChrysler AGDeere & CompanyDenso CorporationFiat S.p.A.Ford Motor CompanyFuji Heavy Industries Ltd.General Motors CorporationHonda Motor Co., Ltd.Hyundai CorporationIsuzu Motors LimitedKanto Automobile Corporation Ltd.Kia Motors CorporationKässbohrer Geländefahrzeug AGMazda Motor CorporationMitsubishi Motors CorporationNacco Industries, Inc.Navistar International CorporationNew United Motor Manufacturing, Inc.PSA Peugeot Citroen S.A.Suzuki Motor CorporationToyota Motor CorporationVolkswagen AGYamaha Motor Co., Ltd.




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Documents

Nissan Motor Co. Ltd. 2002 Case