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Old 02-19-2006, 11:34 PM   #1
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Default Nissan Says It Can Slash Cost by 12% by March 2008

Nissan Says It Can Slash Cost by 12% by March 2008


Feb. 20 (Bloomberg) -- Nissan Motor Co., Japan's second- largest carmaker, plans to cut production costs by 12 percent in the three years ending March 2008 by making better use of its global factories.

The company will introduce technology that allows assembly of different models on the same production line in Taiwan, Thailand, South Africa and Indonesia, said Executive Vice President Tadao Takahashi in an interview on Feb. 17 in Tokyo. The carmaker plans to lift global capacity utilization to 80 percent from 75 percent in March 2005.

``It's extremely important to continue cutting costs,'' Takahashi said. The Tokyo-base maker of Altima sedans already has 18 so-called flexible production lines in Japan, the U.S., Mexico, Europe and China.

Nissan Chief Executive Officer Carlos Ghosn, poised to report a sixth year of record profit for the year ended March 31, needs to hone efficiency to compensate for higher prices for raw materials. The new technology has allowed Nissan to retool its assembly lines to make a new model in one and half months, compared with more than three months in 1999.

``Every company that's successful has to come up with ideas to reduce costs,'' said Koji Endo, Credit Suisse's Tokyo-based analyst who said Nissan shares will ``outperform'' the market. ``Nissan will probably achieve the cost cut target.''

Boosting Utilization

Nissan plans to sell 28 new or redesigned vehicle models in the three fiscal years ending March 2008. Nissan, 44.3 percent owned by Renault SA, expects to sell 4.2 million vehicles globally in the year ending March 2009. That's up 16 percent from an estimate of 3.62 million units, which the company plans to sell this business year.

The automaker, boosting capital investment by 13 percent to a record 540 billion yen this fiscal year, also expects return on investment capital to exceed 20 percent, Takahashi said.

Nissan shares rose 1.4 percent to 1,399 yen in Tokyo at the 11:00 a.m. morning trading break.

``It's important to keep the factory running steadily and to do so, we need to be able to offer models suited to customers' preferences and local needs,'' said Takahashi. Nissan's factories in Japan have a utilization rate of about 85 percent, which is among the highest, Takahashi said.

Steel Costs

Prices of cold-rolled steel sheets in Tokyo rose 13 percent to 87,000 yen as of the end of fiscal first half in September, according to data from Japan Metal Daily's Web site.

Nippon Steel Corp., Japan's largest steelmaker and a supplier to Nissan, said it charged an average of 75,600 yen per ton for steel in the third-quarter, 20 percent higher than the same period a year earlier. JFE Holdings Inc. said on Jan. 31, it charged an average 75,600 yen per ton for steel in the six months to September, 31 percent more than a year ago.

The automaker's so-called Nissan Internal Benchmarking compares productivity, quality and efficiency at 17 vehicle factories around the world using more than 110 criteria.

``By making factories compete with one another, we have been able to see improvement,'' said Takahashi.


Having suppliers on site also helps Nissan cut costs, he said. Calsonic Kansei Corp., 41.2 percent owned by Nissan, has its own production facility in three of Nissan's factories in Japan to make air conditioning systems and radiators, while Visteon Corp. makes auto interiors at Nissan's Canton, Mississippi plant.

``Nissan is the only major Japanese automaker that has suppliers producing modules and parts in a Nissan factory, which helps cut logistics costs and inventory costs,'' Endo said.

Nissan may build new factories or expand after March 2008 when existing capacity is stretched to the maximum, Takahashi said. The automaker is working with Renault to start selling and making vehicles in emerging markets such as Russia and India by cooperating, he said without elaborating.

Renault, France's second-largest carmaker, will sell Indian-made Logan sedans in a venture with Mahindra & Mahindra Ltd. starting in 2007.

India, Asia's fourth-largest economy, is among the so- called emerging markets that Ghosn said Nissan ``still isn't tackling,'' including Russia, Eastern Europe and South America.
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Old 02-20-2006, 08:46 AM   #2
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So let me get this right...snicker..

American car companies get 'lean' by laying off thousands of people.... Nissan is getting better improving factory output and streamlining production with more universal designs...


interesting, to say the least...
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Old 02-20-2006, 08:58 AM   #3
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i think maybe part of the reason why they can do that is because they are already offering cars that people want to buy... unlike GM and Ford who need to axe entire model lines and thus lay off the workers...
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Old 02-20-2006, 09:01 AM   #4
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I'll take this as a NO for the quality looking interior in the next gen Nissan/Infiniti vehicles.
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