Nissan 2006 Annual Report Download - page 26

Nissan Annual Report 2005
24
Customer awareness of Nissan and our
reputation for quality is high in Thailand. Thailand
was actually our first overseas market—we started
operations with Siam Motors back in 1952. When
the Thai baht crisis hit and the Asian economy nearly
crashed in 1997, though, it hurt us. Most other
manufacturers were able to inject capital to save
their local investors and take a majority share.
Unfortunately, we had a financial crisis of our own in
1997 and 1998. We couldn’t put the necessary cash
into the Thai operation, and we lost an opportunity
and the competition got ahead.
Pickups dominate the Thai market, accounting
for 60 percent of the total industry volume, and last
year pickup production was 750,000 units. Thailand
is a fine manufacturing base for pickups—it’s actually
the second-biggest producer of pickup trucks after
the United States—and we have an excellent supply
chain there, particularly for parts. Other makers
had already established Thailand as their base for
pickup exports, and logically we knew we should do
the same.
Pickup production in the United States and Spain
covers the North American and European markets,
so we plan to have Thailand cover the other markets.
Production is scheduled to start at the end of 2006.
We’re currently preparing a new generation of
pickups, too, mainly for export to the GOM market.
The Thai market’s second-biggest segment is the
mid-sized to smaller passenger car. We’re going to
change our offering in this segment, replacing the
Sunny with the Tiida sedan and hatchback. We hope
to keep current customers and gain some new ones
from people who are presently driving the competition.
Before now, we were the only major car
manufacturer in Thailand without a captive finance
company. One problem that created was a loss of
brand continuity. A customer typically starts the
purchase process by seeing a Nissan TV commercial
or reading a brochure, and then goes to the
showroom. At the end of the purchase experience, a
different company was coming in, which meant we
lost a brand touchpoint.
A second reason is that financing is basically a
profitable business. As long as we are selling the
vehicle, and customers are using our financing, we
have a chance to make profit.
Foreign finance companies looking to establish
themselves in Thailand need the government’s
approval. We received our license in March. We’ve
started the pilot phase, and will begin actual
operations at the end of May. This will help support
the sales of the new vehicles coming at the end
of June.
Because Thailand has free trade agreements
with several other Southeast Asian countries,
especially ASEAN nations, we also have a major
regional opportunity. We’ll be raising production to
200,000 units, with 70,000 of them destined for
export markets. Thailand also has a good supplier
base, and assembly costs in our factories are quite
competitive. For these reasons I believe that Siam
Nissan will continue to grow as a global player and
be a major contributor to Nissan Value-Up.
PERFORMANCE