Nissan 2007 Annual Report Download - page 16

Nissan Annual Report 2006-2007
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Fiscal 2006 did not boost our results towards
achieving the objectives of Nissan Value-Up. But we
believe the commitments are still within the potential
of the company and we remain focused on delivering
them completely. Accordingly, we will extend the
delivery period for all Nissan Value-Up commitments
by one year. At the same time, we continue to
prepare our next business plan, and we will
announce it next April.
Nevertheless, during fiscal 2006, we made
tangible progress towards the four key
breakthroughs that are central to Nissan Value-Up.
Our first breakthrough aims to establish Infiniti as a
globally recognized luxury brand. In fiscal 2005,
Infiniti was introduced in Korea. And in fiscal 2006,
the brand was successfully launched in the rapidly
growing Russian market. In fiscal 2007, geographic
expansion will accelerate as Infiniti enters the
Chinese and Ukrainian markets and then extends
across Western Europe in 2008. To serve these new
markets, new products are coming. The all-new G35
sedan launched in 2006 will be followed this year by
the G37 coupe and the EX compact luxury
crossover. Infiniti is poised for rapid global growth.
The second breakthrough aims to build a global
presence in Light Commercial Vehicles—or “LCVs.”
Global sales have grown 57 percent, since the start
of Nissan Value-Up, to 490,000 units in fiscal 2006.
More importantly, the LCV business unit over-
achieved its 8 percent operating-margin milestone.
With LCVs now firmly established as a pillar of our
global business, we are building on this momentum.
The third breakthrough involves developing new
sources for parts, machinery & equipment, vendor
tooling and services in what we call “Leading
Competitive Countries.” Sourcing bases are now
established in China and ASEAN for Japan; in Mexico
for North America; and in Eastern Europe for Europe.
To accelerate progress, the next step will be to
develop a new sourcing base in India. In fiscal 2006,
for Japan, North America and Europe, 15 percent of
our purchasing, by value, was sourced from LCCs,
versus 12 percent the previous year. In fiscal 2007,
we will accelerate this trend to source 24 percent of
our purchasing from LCCs. To reduce costs and
focus employees on core tasks, we are outsourcing
back-office functions and a variety of work in
engineering, information services and manufacturing.
In fiscal 2006, this effort yielded gross savings of
¥43 billion in costs reduced or avoided.
The fourth breakthrough expands our geographic
presence in emerging markets, known as BRICs and
beyond. In Brazil, we are investing $150 million in our
operations and targeting sales of 40,000 units by
2009. In Russia, we are investing $200 million in a
plant in St. Petersburg that will have a capacity of
50,000 units when it opens in 2009. In India, we are
joining Renault in a partnership with Mahindra.
Together, we are building a plant in Chennai that
will open in 2009, with a planned capacity of
400,000 units. In China, since 2003, we have
invested $1.6 billion in our partnership with
Dongfeng, with recent investments in a new engine
plant and a new R&D center.
Despite Challenges, Mid-Term Plan
and Breakthroughs Continue to Drive Our Business
STATUS OF BREAKTHROUGHS
»PERFORMANCE