Nissan Motor (Nissan)
Corporate History & Strategy

Background: Domestic automobile market dominated by imports

In the 1930s, the Japanese domestic automobile market was dominated by imports from Ford and GM of the United States. Mass production systems by domestic manufacturers had not yet been established, and the need to manufacture automobiles domestically was recognized from a national defense perspective. Under these circumstances, Yoshisuke Aikawa, the founder of the Nissan zaibatsu — an emerging industrial conglomerate — determined that if mass production could be achieved domestically, Japanese manufacturers could compete against American companies, and decided to enter the automobile business requiring enormous investment.

For market entry, the automobile business held by Tobata Casting (a casting manufacturer) under the Nissan zaibatsu was used as a foothold. Tobata Casting had acquired the small car 'Datsun' business from the founder of Kubota, and through this acquisition, Nissan had obtained the technological foundation for automobile manufacturing.

Decision: Mass production investment backed by the zaibatsu's capital strength

In December 1933, Automobile Manufacturing Co., Ltd. was established with investment from Nihon Sangyo (the Nissan zaibatsu's holding company) and Tobata Casting. Yoshisuke Aikawa was appointed as the first president. In June 1934, the company name was changed to Nissan Motor Co., Ltd., positioning it as the operating company responsible for the automobile business within the Nissan zaibatsu.

President Aikawa, under the policy that 'you must produce 10,000 or 15,000 vehicles per year to make it a viable business,' actively invested in equipment necessary for mass automobile production. The strategy was to channel revenues earned by companies under the Nissan zaibatsu into the automobile domain as an investment business, planning annual production of 5,000 Datsun vehicles while improving technology through mass production of parts for Ford and Chevrolet.

Construction of a new factory was decided to mass-produce the passenger car 'Datsun.' With a coastal industrial zone being developed in the Koyasu district of Yokohama, land was acquired from the city of Yokohama in 1933. In May 1934, Nissan Motor established the Yokohama factory.

During wartime in 1943, the Yoshiwara factory was established in Shizuoka Prefecture as an evacuation facility, engaging in the production of aircraft engines.

Under the wartime regime, the Japanese government decided to shift the automobile business to a permit system through authorized companies. In 1936, the 'Automobile Manufacturing Industry Law' was enacted, and companies engaged in automobile production were screened.

Nissan Motor, which already had a track record of Datsun mass production, became a designated company under the Automobile Manufacturing Industry Law and engaged in automobile production (military trucks, etc.) throughout the war. The three permitted companies were Nissan Motor, Toyota Motor, and Isuzu Motors, all of which expanded their operations as automakers during the war.

Background: Postwar technological gap and the need to acquire passenger car technology

Japan's postwar automobile industry faced a technological gap resulting from defeat. During wartime, production had concentrated on trucks and military vehicles, and passenger car design and manufacturing technology lagged far behind the West. As domestic passenger car demand recovery was anticipated entering the 1950s, Nissan Motor recognized that its own technological capabilities alone were insufficient to catch up with advanced-nation standards.

President Genshichi Asahara, under the recognition that 'compared to world standards, we are country folk,' decided on a policy of introducing technology from advanced-nation automakers. Austin of the United Kingdom, an established automaker, was selected as the partner. The selection criteria were the high level of engine technology and the company's first-class brand power in Western markets.

Decision: Knock-down production and phased localization

In December 1952, Nissan Motor signed a technical partnership agreement with Austin. The key terms were: knock-down production of the Austin A40 Saloon passenger car (2,000 units annually), phased localization of required parts, Austin's provision of blueprints, materials, specifications, and parts lists for technical support, and permission to use A40 parts in Nissan's other vehicle models.

As consideration for the contract, Nissan Motor paid royalties: free in the first year, 2.0% of factory shipment price in the second year, and 3.5% from the third year onward, with the contract term set at seven years. Nissan Motor established an 'Austin Division' and began assembly production of the Austin A40 at the Tsurumi factory from March 1953.

Result: Pioneer of technology introduction among domestic automakers

Nissan Motor's partnership with Austin became the pioneer of overseas technology introduction among postwar domestic automakers. By 1953, Hino Motors (Renault), Isuzu Motors (Rootes), and Shin-Mitsubishi Heavy Industries (Willys-Overland) had also partnered with overseas manufacturers in succession and commenced knock-down production.

The technology introduced from Austin was absorbed by Nissan's engineers through disclosure of blueprints and specifications, and the company raised its own technological standards by progressively increasing the localization rate of parts. The passenger car design and manufacturing know-how accumulated through this technical partnership became the foundation for later in-house developed models such as the Datsun Bluebird, laying the groundwork for Nissan Motor's growth as a passenger car manufacturer.

Background: Bluebird sales success and insufficient production capacity

In July 1959, Nissan Motor unveiled the passenger car 'Datsun Bluebird' as a model change of the Datsun line. The initial production plan called for 2,000 units per month (24,000 annually), but sales significantly exceeded expectations, and the existing Yoshiwara factory (Shizuoka Prefecture) was becoming unable to handle the production increase.

Additionally, competitor Toyota Motor had established a dedicated passenger car plant — the Motomachi factory (Aichi Prefecture) — in 1959, committing to concentrated investment in passenger cars. The Motomachi factory's operation significantly expanded Toyota's passenger car production capacity, and Nissan risked falling further behind in the domestic share competition unless it strengthened its own passenger car mass production system.

The domestic passenger car market in the early 1960s was expanding rapidly, and cost reduction through mass production was the source of competitiveness. Nissan Motor determined that construction of a new dedicated factory was unavoidable to meet increased passenger car production demand.

Decision: Establishment of a dedicated passenger car plant in Oppama

In 1958, Nissan Motor decided to acquire the former Imperial Japanese Navy Oppama Base site (Yokosuka, Kanagawa Prefecture) as state-owned land. The selection criteria were: proximity to the main Yokohama factory, availability of approximately 1 million square meters of spacious land, potential expansion of 200,000-300,000 tsubo through land reclamation, and the coastal location's advantage as an export base.

On March 23, 1962, Nissan Motor commenced operations at the Oppama factory. It was the company's first 'dedicated passenger car plant,' with an initial annual production capacity of 120,000 units. The factory's workforce was secured by transferring 826 employees from the Yoshiwara factory, which had previously handled passenger car production.

With the production transfer to the Oppama factory, the Yoshiwara factory (Shizuoka Prefecture) ceased passenger car production and was converted into a parts factory. It was utilized as a production base for transmissions and steering components, later becoming a joint venture site with Ford, and currently functions as JATCO's Fuji Plant (headquarters).

Result: Capital investment funded by a Washington Export-Import Bank loan

The total investment for the Oppama factory amounted to 13.9 billion yen, which was difficult to fund solely through domestic bank borrowing and internal funds. Accordingly, Nissan Motor secured a total of $14 million (approximately 5 billion yen) in borrowings from the Washington Export-Import Bank between 1959 and 1961, using U.S.-sourced funding for capital investment.

Utilizing the Washington Export-Import Bank loan, the Oppama factory was equipped with state-of-the-art facilities including 34 press machines. As an automated and rationalized dedicated passenger car plant, it achieved the highest level of production efficiency in Japan.

With the Oppama factory in operation, Nissan Motor established its Bluebird production expansion system and built a passenger car mass production base capable of competing with Toyota Motor. The factory subsequently operated as Nissan's primary domestic plant over the long term, becoming the core production site supporting Nissan's passenger car business.

In 1965, the Zama factory (Kanagawa Prefecture) was established to improve the efficiency of truck production that had been carried out at the Yokohama factory. Around 1968, production of the 'Sunny,' which had been produced at the Oppama factory, was transferred to the Zama factory, which then engaged in passenger car production.

Background: Market share competition with Toyota and shortage of mass production sites

In the mid-1960s domestic passenger car market, Nissan Motor held 28% sales share in second place, chasing the leader Toyota Motor (32%). Compared to Toyota, Nissan had fallen behind in establishing new passenger car mass production sites, and its disadvantage in production capacity versus Toyota was becoming increasingly apparent.

Meanwhile, Prince Motor was an independent manufacturer with the luxury car 'Gloria' as its flagship, but its focus on the luxury segment limited its share to 8% (4th domestically). Additionally, with the government's promotion of 'capital liberalization' in the 1960s making foreign manufacturer entry a real possibility, pressure for consolidation among domestic automakers was intensifying.

Decision: Merger targeting share expansion and acquisition of the Murayama factory

In August 1966, Nissan Motor (President Katsuji Kawamata) merged with Prince Motor. The merger ratio was Nissan Motor 1 : Prince Motor 2, effectively constituting Nissan's absorption of Prince Motor. Simple addition of pre-merger shares yielded Nissan 28% + Prince 8% = 36%, exceeding Toyota's 32%.

The primary objective of the merger was to acquire the Murayama factory (Musashimurayama, Tokyo) owned by Prince Motor. Prince Motor had established a large-scale factory with a site area of 400,000 tsubo in 1962 for passenger car mass production, and Nissan aimed to dramatically expand its passenger car production capacity through the merger by acquiring the Murayama factory.

Result: Failed to capture the No. 1 share position

The merger expanded Nissan's production bases and strengthened its product lineup by adding Prince's Gloria and Skyline. However, Toyota Motor's rapid expansion of 'Corolla' sales after the merger meant Nissan's goal of capturing the No. 1 domestic share was not achieved.

As a result, the Toyota No. 1 / Nissan No. 2 structure became entrenched, and Toyota maintained its advantage in domestic passenger car market share competition over the long term. President Kawamata stated 'It is unreasonable for dozens of manufacturers to exist in this narrow market, and consolidation must be pursued more rigorously,' but failed to seize the initiative in industry restructuring.

Background: AT patent constraints and export vehicle installation risks

In the late 1960s, automatic transmission (AT) installation was becoming a standard specification for passenger cars. Nissan Motor had installed its in-house developed AT in domestic sales vehicles (Sunny B10), and there were no patent issues in the domestic market. However, for export vehicles, there was a risk of infringing on AT-related patents held by Borg-Warner of the United States, creating a barrier to export expansion centered on North America.

Borg-Warner had cross-licensing agreements with GM and Ford, creating a structure where patent issues could be avoided by licensing technology from either company. However, Borg-Warner had established a joint venture with Aisin Seiki, a Toyota-affiliated parts manufacturer, and direct partnership posed competitive concerns for Nissan Motor.

Decision: Establishment of JATCO as a joint venture with Ford

Accordingly, Nissan Motor chose to introduce technology from Ford, a cross-license partner. In January 1970, Japan Automatic Transmission Co., Ltd. (JATCO) was established as a three-company joint venture of Ford, Nissan Motor, and Mazda. The ownership ratio was Ford 50%, Nissan 25%, and Mazda 25%, with Ford holding the controlling interest.

For JATCO's headquarters factory, part of the site of the former Yoshiwara factory — Nissan's transmission production base — was utilized. The Yoshiwara factory, which had been converted from passenger car production to a parts factory following the Oppama factory's commencement of operations, took on a new role as the base for a dedicated AT manufacturer.

Background: Sales slump and declining utilization rates at domestic factories

Entering the 1990s, Nissan Motor's domestic passenger car sales continued to stagnate. In FY1993 (March), the company fell into an ordinary loss, and yen appreciation further worsened the profitability of overseas exports. Domestic factory utilization rates had declined below 80%, and excess production capacity was becoming a structural problem squeezing profitability.

President Yoshifumi Tsuji recognized the company's weak sales capability, noting that 'compared to Toyota, the sales decline at the end of model cycles is severe' and 'after-sales service and follow-up support are insufficient.' Improving the cost structure through right-sizing production capacity was an urgent priority.

Decision: Cessation of vehicle production at the Zama factory and production capacity reduction

In February 1993, Nissan Motor announced the cessation of vehicle production at the Zama factory (Kanagawa Prefecture). The plan was to reduce annual domestic production capacity from 2.7 million units to 2.3 million units, a reduction of approximately 400,000 units. Production of the 'Sunny' at the Zama factory was transferred to the Kyushu factory, and the 'Presea' to the Murayama factory.

On March 22, 1995, production of the 'Sunny' and 'Presea' at the Zama factory was terminated. This brought an end to 30 years of vehicle production since the factory commenced operations in 1965. President Tsuji stated 'The Zama issue is only part of the reform' and 'Even if we start now, results won't appear for three years,' suggesting that the Zama factory closure was the first step in Nissan's reconstruction.

On October 18, 1999, Nissan Motor formulated the 'Nissan Revival Plan.' The plan targeted improving financial health through 1 trillion yen in cost reductions and halving interest-bearing debt excluding sales finance (from 1.4 trillion yen to 0.7 trillion yen) by FY2003 (March), aiming for a return to profitability in FY2001 (March) and an operating profit margin of 4.5% by FY2003 (March).

Following the formulation of the Nissan Revival Plan, a decision was made to implement workforce reductions. Along with the closure of five factories, a total reduction of 21,000 employees was decided, though reductions were achieved through redeployment and hiring restraint rather than voluntary retirement solicitation.

In FY2000 (March), Nissan Motor posted a net loss of 684.3 billion yen, its largest-ever deficit. In addition to 232.6 billion yen in special losses from business structural reform under the Nissan Revival Plan, the company recorded 275.8 billion yen in pension past service cost amortization, 48.4 billion yen in product warranty provisions, and 192.5 billion yen in other special losses, bringing total special losses for the fiscal year to 749.6 billion yen.

Background: Completion of domestic restructuring and pursuit of overseas growth markets

Following the Renault investment in 1999 and the appointment of Carlos Ghosn as president, Nissan Motor completed its domestic business restructuring under the Nissan Revival Plan by 2002. With structural reform including closure of five factories and reduction of 21,000 employees having improved financial health, formulating the next growth strategy became the agenda.

For global expansion, Nissan Motor selected North America and China as priority markets. Since alliance partner Renault had an established business base in Europe, Nissan prioritized sales expansion in North America and entry into the Chinese market, where motorization was rapidly progressing.

Decision: Large-scale local production investment in North America and China

In North America, the Canton factory (Mississippi) was established in March 2003 as the second U.S. local production site, securing annual production capacity of 400,000 units. Local production of U.S.-market models centered on large vehicles commenced.

In China, Dongfeng Motor Co., Ltd. was launched in July 2003 as a joint venture with a local company. The Huadu factory was established in 2004, commencing local four-wheeled vehicle production in China with a planned annual capacity of 150,000 units. From the 2000s through the 2010s, Nissan Motor transitioned to a revenue structure where stagnating domestic sales were compensated by overseas sales expansion in North America and China.

In 2005, Nissan Motor made Calsonic Kansei — an affiliated parts manufacturer listed on the TSE First Section — a consolidated subsidiary (41.59% ownership). In March 2017, the decision was made to divest. The buyer was private equity firm KKR. In the fiscal year preceding the sale (FY2016, March), Calsonic Kansei's overview was: revenue of 105.3 billion yen, operating profit of 34.3 billion yen, and 21,987 employees.

With the divestiture of Calsonic Kansei, Nissan Motor recorded a gain on sale of affiliated company shares of 115 billion yen.

Return to net losses due to sales downturn

With the new vehicle launch cycle having run its course, coupled with sluggish sales in North America and an economic downturn in China, Nissan posted a net loss of 671.2 billion yen in FY2020 (March). For Nissan Motor, this was a loss comparable in magnitude to the period immediately before Renault's management intervention.

Global workforce reduction

In light of the deteriorating performance caused by the sales downturn, Nissan Motor decided on a large-scale workforce reduction. In July 2019, a reduction of 12,000 employees globally was announced.

Regarding the underperforming Nissan, alliance partner and largest shareholder Renault (holding 43.4% of Nissan shares) decided on a phased sale of its stake. A new alliance agreement was signed in July 2023, deciding to reduce Renault's ownership of Nissan to the 15% level.

As a result, Renault transferred 28.4% of its Nissan Motor shares to a trust company. As of March 2024, Nissan's largest shareholder was the trust company (24.8%), followed by Renault as the second-largest shareholder (15.9%), and Nissan reorganized its relationship with Renault.

Against stagnant sales volume (actual sales of 3.2 million units/year), the company maintained global production capacity of 5 million units/year, leading to declining factory utilization rates. Around 2024, utilization rates had fallen to 64% globally, and excess production capacity was a factor deteriorating profitability.

Accordingly, Nissan Motor decided to reduce production capacity. Approximately 9,000 employees were to be reduced globally to address the surplus workforce resulting from capacity reduction. The reduction targets included personnel in Japan.