Nissan 2005 Annual Report Download - page 66

Nissan Annual Report 2004
64
“To understand the depth of
Nissan’s commitment to
China, you need look no
further than Dongfeng Motor
Co., Ltd., our joint venture
with Dongfeng Motor
Corporation. DFL, as we
refer to it, is the biggest JV in
China’s automotive industry,
representing a 50-50
investment by Nissan and
Dongfeng totaling RMB16.7
billion (US$2 billion). Dongfeng is the major
commercial vehicle manufacturer in China, and the
Dongfeng brand is famous throughout the country.
With 70,000 employees and over fifty subsidiaries,
DFL is a strategic alliance for both companies.
In China, most joint ventures with foreign makers are
small and focus only on producing the foreign
partner’s products. In contrast, DFL integrates
Nissan’s technology, products and the Nissan
Management Way in the production of vehicles under
both the Nissan and Dongfeng brands.
Greater competition and a softer economy made
2004 a difficult year in the passenger vehicle market.
Yet we sold approximately 92,000 passenger vehicles
in China during the last calendar year. That number
included 61,000 DFL-produced Nissan-branded
vehicles, 21,000 Zhengzhou-produced Nissan pickups
and SUVs, and 10,000 imported vehicles. We also sold
nearly 88,000 light commercial vehicles under the
Dongfeng brand.
Increases in raw material costs and reductions in selling
price did affect the commercial vehicle business in fiscal
2004. As a result, operating profit from DFL to Nissan
totaled ¥10 billion, which was lower than anticipated. While
we work to manage material price increases, we’re still
focused on improving the quality and price competitiveness
of our products. We’re also planning to export these models
to Africa, South America, and the Middle East.
Two or three years ago, the passenger vehicle market
in China was a seller’s market. That reversed during the last
half of the year, influenced by macroeconomic controls and
more products coming onto the market. As a result, most
automakers entered into a price war. We stayed out of that
because we didn’t want to damage our brand image.
Instead, we found alternative means to adapt to the market.
For example, we did not discount the selling price of the
Teana during its high-profile launch. In December 2004, we
also announced to customers that we would give them a
rebate if prices went down after they bought a Nissan. We
released a model change for the Sunny, and kept firm on
the Teana’s pricing. These actions have helped keep our
brand image high, while building customer loyalty, selling
cars and reducing inventory.
Calendar year 2005 looks very promising to us. The
Teana has been a tremendous success, winning 12
awards—including Car of the Year for 2005 in China—and
helping solidify Nissan’s reputation for quality. The car
continues to sell well, and opens the door for five models
that will be launched in fiscal 2005: the Tiida sedan in
April; Fuga in June; Quest in August, which is imported
from the U.S.; the Tiida in the second half along; and the
350Z in calendar year 2006. The Tiida has already won
two awards at the Shanghai Motor Show for best new
model and roominess, and answers the strong demand in
China for fuel efficiency.
In June 2005, the China State Administration for
Industry and Commerce officially recognized the NISSAN
trademark as a “famous trademark.” Only trademarks with
superior reputations receive this distinction. Not only does
this represent an important milestone in Nissan’s efforts to
build its brand in China, it also represents the first time a
Japanese automaker has had its trademark acknowledged
in China. Currently, Nissan and YKK are the only Japanese
companies to be awarded this status. Now that Nissan’s
brand image is respected in China, we must improve our
CHINA
Succeeding Despite Growing Competition
KATSUMI NAKAMURA
President & CEO,
Dongfeng Motor Co., Ltd.
OUR WORLD