Profit companies

Nissan executive: recovery plan is working, US factories will expand

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FARMINGTON HILLS, Mich. — Two years ago, the struggling Nissan Motor Co. announced a restructuring plan to cut costs and revamp its aging model line in a bid to rebuild sales as the coronavirus pandemic s attenuated.

Jérémie Papin, the company’s president for the Americas, says the turnaround is underway. In May, Nissan reported its first full-year profit in three years, and Papin says North America is a big contributor.

Sales in the United States, however, struggled as a global shortage of computer chips hampered production by automakers. Additionally, Papin says Nissan is pulling out of selling large numbers of vehicles to low-profit car rental companies.

He spoke about the future of Nissan, the chip shortage and the need for electric vehicle factory capacity in the United States. The interview has been edited for length and clarity.

Q: US sales in the first quarter fell nearly 30%. Is it because of chip shortages and supply chain issues?

A: Any performance on a quarterly basis will depend on available chips. Performance in no way reflects the interest and level of customer demand we have. The company realizes its outperformance thanks to all the work that has been done on efficiency, by bringing the customer to buy value.

Q: Japanese leaders have said that you will need a new factory in the United States to meet the demand for electric vehicles. What is the status of that?

A: We expect customer demand for Nissan products to be 40% EV in 2030. I expect further investment in Canton (Mississippi assembly plant). I would expect further investment at Smyrna (Tennessee assembly plant). I would expect further investment in Decherd (Tennessee powertrain plant). As we succeed, this is the condition where there could be a need for a third assembly plant by 2030.

Q: What about battery factories?

A: Batteries for products made in the United States will be manufactured in the United States. The announcement of who would be the supplier in Canton, we will do in the next few weeks, months. We want an American battery supplier. We are working to finalize this.

Q: There used to be a lot of Nissan vehicles on car rental company lots. These sales are not as profitable as retail sales to individuals. Are you reducing rental activities?

A: I would say that today we are a third of what we were. We have increased profitability per unit. We are a small company, but we are a much healthier and more profitable company that can invest in its future.

Q: Have you seen a change in consumer buying habits with recent inflation, interest rates or gas price increases?

A: The increased monthly payments will have an impact as most cars are financed. There will clearly be an impact on customers’ ability to pay. It will be a balance between the affordability of the monthly payment and the pent-up demand.

Q: Because new vehicle inventory is limited, people pay list price for cars. Do you see this as a permanent change rather than a haggle over price?

A: This is not what people want. People are used to transparency in their pricing, to getting things on time and quickly. I can’t elaborate on what will happen to the incentives. The strategy we want is one where we don’t need the incentives of the past to sell the cars. It’s fully digitized, and when you do that, there’s price transparency because there’s been no price discussion. Either you are interested and we help you with the financing, or you are not. I don’t think there was ever a reset like it was today. And I think the whole industry, including the customers, is doing well.