Driving around the Gulf, don’t be surprised if you see a car parked in someone’s driveway with a glowing bright green or blue colour. If you do, it’s likely to be a Nissan model. While the Japanese firm is not the first carmaker to apply glow-in-the dark paint to its vehicles, it has teamed up with British inventor Hamish Scott to adopt the specially-designed paint, which absorbs UV energy during the day so that it can glow for up to ten hours when the sun goes down. Not only is it handy for finding your car in the dark, it’s also part of the carmaker’s ‘Innovation that excites’ tagline and a key element of its six-year global ‘Power 88’ expansion strategy to try and move closer on its big arch rival Toyota.
Sitting in the At.mosphere Restaurant & Lounge at the top of Dubai’s Burj Khalifa, the world’s tallest building, Nissan Middle East’s managing director Samir Cherfan certainly doesn’t seem to need any paint — he’s already positively glowing.
It’s no wonder, as he proudly unveils the company’s latest financial results, which show Nissan has maintained its status as the fastest-growing automotive brand in the Middle East for the third consecutive year, selling a record-breaking 219,129 units in the 2014 financial year, up 3.3 percent on 2013. Closer to home, the carmaker recorded an 18.1 percent sales increase in the Gulf region, with 185,135 units sold in 2014, versus 156,778 in 2013, increasing its share to 10.3 percent.
“We have grown twice as much as the market so with the market growing 4 percent we are growing 13 percent, so three times more than the market is our plan for next year,” says Cherfan. “And the year after similar levels,” he adds confidently. “So going from 10.3 to 11.2 to 12.3 percent market share within the next two years… this is our business objective in the region.”
In the UAE, Nissan maintained its strong number-two position in the sales charts, selling 63,036 units, up 10 percent versus 2013 and achieving a 15.3 percent market share. While the UAE is a mature market for Nissan, Cherfan is determined to move closer to the number one player, Japanese rival Toyota. However, he concedes that this is a bitter fight as the market is not growing quickly, so it is a case of eating into his bigger rival’s share in order to continue its rapid growth.
“Today you see the winner and the loser. When Nissan grows, the main competitor goes down because the market is not fully extensive. That allows us to be the fastest-growing brand. How to achieve that next year is just to deliver on our results.
“In the UAE we are a strong competitor as the others are far below and our objective is to close the gap on the other number one, which is obviously Toyota in this market. In the last two years the purchase consideration of Nissan grew by 46 percent, closing the gap with the number one. But in a mature market by doing the right things, which is quantity and quality and leveraging our line-up of good models and brand investment, we are growing step by step.
“In the Emirates, and in other countries like Qatar, we have an investment plan to support the business growth and this is done in a very systematic way. I have mapping on all the region for what the demography is and where we need to have showrooms. I have a network development team who is working daily with our partners in order to build the capacity to support the growth,” he says.
While markets like the UAE may be maturing, the real battleground in recent years for Nissan has been Saudi Arabia, where it initiated a complete overhaul of its operations two years ago.
“The previous supplier was the historical partner, there before for 50 years. In 1987 they reached 132,000 units in Saudi, then they had some challenges and in the last four or five years we were in business crash mode. So in November 2013 we unveiled a revamp plan and I am presenting the results today.
“First, the great breakthrough results are in Saudi because we are starting so low. In Saudi we have reach after just a year and a half of operations. Second, in terms of purchase consideration we have seen 27 percent growth,” he says proudly of how they addressed the challenges and failures previously apparent in the largest market in the Gulf.
The results show how successful this turnaround has been. After the first full year of operation under its revival plan, Nissan, with its new kingdom-wide dealer Alissa Auto, reached the third position in sales, shifting 61,806 units. Starting from what Cherfan described as “business crash mode” the company has now clawed back a 7.2 percent market share, representing 141.7 percent growth year-on-year compared to 2013.
With triple-digit growth in place, Cherfan has big plans to capitalise on this, with strategic plans for expansion across the kingdom. “In Saudi where we have revival plans… There we are growing at fast speeds in terms of network coverage, starting from scratch and going to 60 showrooms by final year ending 2016. This is massive growth that puts us in second place as the main competitor,” he says.
By the end of 2014, Nissan had a total of 38 outlets in Saudi Arabia; it’s pushing for 50 by the end of this year, and 60 by the end of next year. Cherfan also confirms some of the new showrooms will be existing ones it plans to take over, while others will be newly built.
Nissan’s strategy for success is based on its well-known global growth strategy ‘Power 88’, which chairman and CEO Carlos Ghosn announced Nissan would achieve by 2016. Under the Power 88 Mid Term plan, Nissan Middle East announced that it will be aiming to sell 240,000 units in the Gulf by the end of fiscal year 2016, targeting a 12.3 percent overall market share. Ghosn announced the wide-ranging, six-year business plan that will accelerate the company’s growth across new markets and segments in 2011. As part of the push, Nissan will renew its focus on the overall customer experience through actions that elevate its brands’ power and sales power and by the end of 2016 it aims to achieve a global market share of 8 percent.
This month, the company announced its global financial figures, delivering solid full-year revenues and profits. Robust demand, especially for new products in North America and Western Europe, along with cost efficiencies and the continued correction in the yen-dollar exchange rate, offset challenging market conditions in Japan and several emerging markets.
Operating profit rose to ¥589.6bn ($4.74bn) for the fiscal year 2014, representing a 5.2 percent margin on net revenues that reached ¥11.38 trillion for the period. In the fourth quarter, operating profit was ¥171.6bn ($1.39bn), while net income reached ¥118.8bn ($959.3m) and revenues increased by 2.6 percent to ¥3.29 trillion.
“These are solid results in a highly competitive marketplace,” Ghosn said at the time. “We have been encouraged by demand for our new products.”
Cherfan admits that while “the Middle East volumes, compared to Nissan global volumes of over 5 million units, are quite small, if you take the growth and contribution of the Middle East it is more than that.” Globally, Nissan has a 6.2 percent market share, but Cherfan points out that regionally it is at 10.3 percent and growing fast, meaning the region is already ahead when it comes to meeting its Power 88 goals.
“In the year ahead, we will remain focused on delivering continued revenue and profit growth, driven by our product and technology offensive, cost and sales discipline, and growing synergies from the Renault-Nissan alliance. These actions will ensure we remain on the right path towards our mid-term strategic goals,” Ghosn said recently.
The Renault-Nissan alliance was set up in 1999 to save the Japanese carmaker from bankruptcy in 1999, but Nissan has now outgrown its parent company to account for two thirds of their combined 8 million vehicle sales and a bigger share of profit.
This month, Ghosn also confirmed there was no need to change the carmaker’s capital alliance with Renault, despite France raising its stake and voting rights in Renault in April. The French government, which owns almost 20 percent of Renault, has said it wants to safeguard French interests at the carmaker, which is deepening its ties with Nissan. However, Renault has warned that the government’s move could damage the alliance.
Ghosn has moved to quell any worries or threats to the partnership and claimed that the alliance had “zero influence” on the carmakers’ daily operations. “We continue to work today exactly the way we were working from the beginning, with the two teams working together, developing synergies,” Ghosn told reporters. “So there’s no reason for us to change.”
Nissan’s rivals Toyota and Mazda in May launched a long-term partnership amid a push by carmakers worldwide for more consolidation, in a bid to cut costs by building scale. The Renault-Nissan alliance already has partnerships with Daimler and Avtovaz, but Ghosn said it had no immediate plans for any more partnerships at present. He also said it was “too early” to consider tie-ups with non-carmakers such as Google, which is trying to enter the car market.
For the fiscal year ahead, Nissan expects to sell 5.55 million units worldwide, with new models, including the Nissan Maxima, Lannia and Infiniti Q30, adding to its stable of nearly 30 models on offer.
“There are plenty of headwinds impacting the industry at the moment such as falling oil prices and currency fluctuations, plus closer to home there are instabilities in Iraq and the Azerbaijan regulations situation. However, Nissan has excelled in the last financial year and lofty targets will again be met in the next one,” Cherfan says of the outlook ahead.
In terms of the fluctuating oil price, Cherfan says it does not necessarily mean that drivers will use their cars more to take advantage of the lower petrol prices. “Not really, we are the global leader in sustainability so it is not about driving more. We have the technology to consume less petrol, or not at all with the electrical vehicles.
“The impact is that when oil prices are down the resources of the GCC is down. This can slow down the market. You can look at it from the pure consumer level but it is also from the government investment level. We think the market will still be growing next year, but at a lower rate than before,” he says.
Another major challenge facing all carmakers in recent years is the constant recalls which seem to have occurred with increased regularity across the industry these days. Last month, Honda, Toyota and Nissan recalled 600,000 UK vehicles up to 12 years old as part of a global recall of 34 million vehicles due to the defective airbags, which can erupt with too much force, spraying shrapnel inside the car.
While Ghosn has said that the carmaker has allocated sufficient funds to cover the recall, Cherfan dismisses speculation in the media that car recalls have become a lot more regular in recent years and are due to a lack of testing before models are released onto the market.
“I don’t think so… The car has never been more reliable as today. The quality is our main focus and whenever we have any risk we make a report. This is done in a very structured way. We gather the parts and we communicate to the market. It can happen to any manufacturer. We are never compare who does what, we try to be the most professional and efficient.”
After he won his gold medal at the 2012 Olympics, Jamaican record-breaking runner Usain Bolt, who is currently the fastest man alive, was appointed Nissan’s new ‘director of excitement’, as part of its new marketing tagline. Nissan claims that “the fastest, most exciting man on the planet captures the essence of the most thrilling car on the road.” Let’s see if their partnership with Bolt can finally help Nissan to push past Toyota and become the biggest carmaker in the world.
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