Nissan 2006 Annual Report Download - page 55

Nissan Annual Report 2005 53
because we anticipate a significant increase in sales
there, and we are also considering setting one up in
China. Of course a finance company cannot expect
to get 100 percent of the car sales, so we usually
plan for a minimum of 50,000 or 60,000 units in
retail sales, anticipating that we’ll get 30 to 40
percent penetration.
Coordination and cooperation with Renault is
also a major driver for our sales financing business.
Having Nissan and Renault set up an Alliance
finance company to provide financing to our
respective dealers is our favored solution. That is
what we did in Mexico. We rely on the larger sales
company in the country to take the leadership role.
We are currently planning to use the same
method in Korea, where Renault has more sales
volume than Nissan. If Nissan is slightly ahead in
a market and establishes a finance company,
Renault can piggyback on that. That may happen in
Thailand, where Nissan already has a company.
We’re looking at China, Russia and other countries in
which we’ll have the necessary volume and deciding
which company should establish the finance
business. Utilizing Nissan and Renault’s expertise,
people and systems, we have both become much
more powerful.
The sales finance business will also act as a
buffer. The auto industry is cyclical, going up and
down. Nissan’s sales do, too, but the finance portfolio
is usually pretty stable. Once you book a contract,
you have revenue coming in over a three- or five-year
period. If you don’t have a finance company in place,
you’re missing a crucial tool for selling vehicles and
making a profit contribution. If you rely on banks to
finance your sales, you’re just letting them make the
money and providing them with a customer base to
sell their products to.
A finance company is an excellent tool for
marketing and boosting sales, enhancing customer
loyalty and maintaining our customer database. A
dealer may lose track of a customer after selling the
vehicle, but a sales finance company, having a three-
or five-year contract, contacts customers regularly.
You know their living situation and how their income
has changed. We can also offer them future vehicle
contracts, and insurance products, and pursue other
related business.
To me, sales finance mirrors the automotive
business. You could just play in the big markets—the
U.S., Europe and Japan—and ignore the rest. But
everyone expects the volume in the rest of the world
to grow, and sales finance can play an important role
in that growth. We’re not anticipating big initial profits
in China, Thailand and elsewhere. Once the volume
catches up, however, we’ve got a strong chance to
maximize profits on both the automotive side and
financing side.
In April, we formed a virtual organization to
control all of Nissan’s sales finance companies and
work closely with Renault’s sales finance division.
The organization’s head, an American, travels
constantly to ensure that each finance company is
working well. He has six people reporting to him
with plenty of experience in sales finance, including
IS. I’m very pleased to have this organization
overseeing operations.
75
60
(%)
(FY)
45
30
15
0’04 ’05 ’04 ’05 ’04 ’05
NFS NMAC NCI
NFS: Nissan Financial Service, sales finance company in Japan
NMAC: Nissan Motor Acceptance Corporation, sales finance company in USA
NCI: Nissan Canada Inc., sales financing division in Canada
Lease
Retail
3%
26%
3%
30%
15% 22%
35% 27%
50%
42%
23%
17%
Penetration
Total funding
amount*
5,447
billion Yen
Equity 7.5%
ABS Off B/S 4.4%
ABS On B/S 39.3%
* (= Total assets – Other liabilities + Off balance sources)
Group Finance 17.8%
S/T Loan 9.2%
L/T Loan 9.8%
Bonds 6.9%
CP 5.1%
Funding Sources
INVESTMENT FOR THE FUTURE