Debt-ridden Nissan hopes tech can reverse slide


Staying competitive: Nissan vehicles on display outside a showroom at the company’s global headquarters in Yokohama. ProPilot, its semi-autonomous driving system, is highlighted by industry experts as a technology that could prove pivotal for the firm. ─ Bloomberg

TOKYO: After two years of faltering sales and fallout from the 2018 arrest of ex-chairman Carlos Ghosn, Nissan Motor Co’s newly installed management are at another crossroads: how to get Japan’s second-largest automaker out of a rut and beyond the shadow of the disgraced executive who drove its strategy for decades.

It’s a tall order, particularly considering Nissan’s hefty pile of debt, around 8.3 trillion yen (US$80bil) – double what it had 10 years ago – lacklustre showing in Europe, and United Kingdom factory supply chain woes.

Nissan is also facing unparalleled competition, especially in the realm of advanced autonomous driving. The automaker spends only about half of the one trillion yen that Toyota Motor Corp outlays annually on research and development (R&D) and carmakers in general lag behind capital-rich tech firms like Alphabet Inc, which has spent more than US$1bil on self-driving technology via subsidiary Waymo LLC.

Nissan senior vice-president Takao Asami is cognisant of the challenges, admitting that “if we lose out in terms of technology, we’re going to lose out in terms of business”.

“Lately, there’s been a lot of discussion internally about what our DNA is, what areas we can dig deep into and win, ” Asami said in an interview. One idea surfacing within the company’s executive committee is that Nissan needs to go back to its roots, doubling down on R&D to revive a perception that existed before Ghosn’s turn of the century-arrival of Nissan as the country’s leading automaker when it comes to next-generation technologies.

That means reaching into shallow coffers to make sure Nissan remains ahead of the competition in the two technological changes sweeping the auto industry: electrification and autonomous driving.

By fiscal 2023, Nissan aims to sell one million pure electric and electric powertrain-fitted vehicles, and 1.5 million vehicles equipped with ProPilot, the company’s semi-autonomous driving system, annually. By comparison, Toyota is targeting 5.5 million electrified vehicles a year by 2025 and is equipping most of its new vehicles sold in major markets with autonomous features.

ProPilot, which includes features that hold a vehicle in a single lane and match its speed to surrounding traffic, is highlighted by industry experts as a technology that could prove pivotal for Nissan, with the potential to boost the automaker’s sales and brand image – if it can keep ample funding flowing into its development.

Nissan “stands out” in how it has brought autonomous features to the mass market, said Deloitte Tohmatsu Consulting Partner Lei Zhou. The carmaker introduced ProPilot into a wide range of models early on, which has provided the scale to bring costs down, Zhou said.

Autonomous driving is typically defined on a five-step scale, ranging from zero, where cars issue automated warnings, to level five, where they will be able to handle all roads and conditions without human intervention. Technologies commercially available in vehicles today – including Nissan’s ProPilot – max out at level two, meaning an automated system can take control of certain functions, but drivers must continuously monitor and be prepared to jump in.

Tech giants in the United States and China are more advanced when it comes to the computer science-heavy arena of advanced level four or level five autonomous driving.

Investing in lower-level technologies comes with its own set of challenges, too. Though easier to make profitable now, the technologies run the risk of quickly becoming standardised. “ProPilot’s features are considered advanced within level two systems today, but in the blink of an eye, they’ll become common features instead of selling points, ” Bloomberg Intelligence analyst Tatsuo Yoshida said.

Nissan was one of Japan’s industrial pioneers, carving out its place alongside Toyota by building a reputation as an early adopter of new automotive technologies. It began exporting cars to the US in the late 1950s and found success with its Datsun 240Z sports car, whose “unbeatable combination of rakish lines, raw horsepower and affordability young Japanese and American guys found impossible to resist, ” Bloomberg Businessweek reported.

But there were some big missteps. In the late 1980s, Nissan rolled out a series of forgettable sedans that were more expensive than their rivals. By 1999, Nissan was on the verge of bankruptcy and needed emergency loans from the government to stave off collapse. Ghosn, dispatched by Renault SA to Tokyo after the French company bought a strategic stake, righted the ship then. ─ Bloomberg

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