Nissan SWOT Analysis 2019.
Nissan is one of the leading automobile brands in the world with a global footprint. The company has sustained its growth rate in a challenging environment through focus upon technological innovation. Its sales of vehicles grew to 5.77 million units in 2017 and then fell again in fiscal 2018 (ending March 31, 2019). Market share of Nissan grew in China and Japan but fell in Europe and the U.S. The automobile industry has entered a difficult phase in 2019.
| Company | Nissan Motors. |
| Head Office | Yokohama, Kanagawa Prefecture, Japan. |
| Founded | 1933. |
| 2018 Revenue | ¥ 11,574.25 Billion. |
| Employees | 138,910 (2017). |
| CEO | Hiroto Saikawa. |
| Leading Competitors | Honda, Ford, Volkswagen, Hyundai, Tesla, Suzuki, Toyota, BMW, GM, FCA, Mercedes Benz. |
Around the world, the popularity and sales of electrical cars is growing. Nissan is also expanding its range of EVs to grow its sales in the leading car market of the world. In several important markets, its electric vehicles performed well and sustained the sales and market share. The company has created a midterm strategic plan for the future that focuses upon sustainable growth and technological innovation. The initiative also focuses on China which has become the leading automobile market of the world. In the future, Nissan plans to bring more products tailored to suit the needs of the Chinese customers. The focus of Nissan is upon Intelligent mobility that offers customers more convenient and environment-friendly options to travel.
Nissan has made important strategic changes to ready the company for the future challenges. The company is positive about faster growth in the coming years. To sustain its growth rate, the company has shifted its focus towards electrification, autonomous driving and customer experience. These things will have an effect upon every player in the auto industry. The growth strategy of Nissan still centers upon customers. Their expectations are changing and so are the market dynamics. In such an environment, Nissan will move into the future with a firm focus upon customer experience.
Read more about Nissan and its strengths, weaknesses, opportunities and challenges in this SWOT Analysis :
STRENGTHS
Brand equity:
Brand equity in the automobile industry is an important strength and a sign of business stability. To form strong brand equity, companies invest in technology, customer experience as well as marketing and building trustful and strong relationships with the stakeholders. Brand image matters more than ever in the automobile industry because of growing competition as well as regulatory pressures and consumer interest in a company’s reputation. Nissan has maintained strong brand equity overall which is a result of its consistent focus upon technological innovation, customer experience and investment in employees, community as well as other stakeholders.
To further grow its brand equity, the company has made a strategic plan as a part of which the company will grow its investment, electrical vehicles, sustainability and maximizing satisfaction for all the stakeholders. Its focus on CSR has also helped the company grow its brand image stronger. The automobile industry has entered a challenging phase in the twenty first century and most brands have experienced a decline in sales in 2019. However, Nissan has been able to sustain its sales and even grow its market share in China. Except for a decline in market share in the United States, Nissan did not experience any major decline in net revenue in fiscal 2018 as compared to 2017. This is a result of strong brand equity and continuous investment in product quality.
Technological innovation :
Technological innovation is the key to faster growth in the automobile industry. The growth of digital technology, AI and changing lifestyles of customers around the world also necessitate higher investment in research and development. Research and development expenses of the company climbed to 495.8 Billion Yen in 2017 compared to 490.4 billion Yen in 2016 (Nissan Annual Report). The company has established seven research centers around the world. Three of these research centers are in Japan and rest in U.S.A., Russia and India. One of the core focuses in terms of research and development at Nissan is electrification. The focus of Nissan Intelligent mobility is to create solutions that make driving more exciting, connected and safer.
Some of the innovations created by Nissan include Nissan Pro-pilot, an automated driving system, an epedal which allows for acceleration, deceleration and complete braking using just one pedal. Nissan’s Propilot is designed for use on highways and works to significantly ease the load on the driver by offering a combination of steering, acceleration and braking that can work in fully automatic mode. The Propilot automated driving system uses advanced imaging technology to understand the traffic and steer the vehicle through it. Other areas where Nissan has focused its research and development efforts include e-powertrain and Lithium ion battery for EVs.
Large Product portfolio :
Nissan has a large product portfolio to cater to the varying needs and lifestyles of different customer segments. From sedans to pickup-trucks, SUVs and sports cars, the company has brought a large range of vehicles. Nissan has proved to be a smart automobile brand that has touched the lives of various customer segments through its large product portfolio. The company keeps releasing new models to suit the expectations and needs of modern consumers. The auto industry is changing fast and various consumer demographics have different needs and varying expectations from the automakers. Nissan has focused upon the growing demand for SUVs around the world and a continuously growing inclination of consumers towards the electrical vehicles.
Electrified cars are now attracting consumers like magnets. Auto industry has faced a decline in demand in 2019 but the demand for electrical cars grew stronger than the previous years. To respond to the changing market trends, Nissan released some new models. In the last two years, the company has released several new models including those equipped with ProPilot technology and electrified models. Its electric car models are also a source of competitive advantage for the brand. In March, 2019, the company announced that it had achieved the sales of 400,000 units of Nissan Leaf Electric Vehicles. In this way, Nissan’s Leaf is among the best selling EVs worldwide. This electric cars is both efficient and attractive. It is equipped with 40 kWh battery, sleek aerodynamics and the latest technologies. The car is safe and efficient which means and safe and pleasant driving experience. Nissan’s other electric cars and vans are also equipped with other advanced features and known for their lack of noise and vibration. The company has also continued to upgrade Leaf each year to maintain its popularity in the global markets. Tesla’s sales increased in 2019. However, Nissan’s Leaf was still a formidable presence in the electric car market. Pick up trucks and SUVs are the core strength of the company and Nissan has grown its focus on these two segments of vehicles to grow their sales. Apart from these, the company has also released a few attractive sports car models including a roadster. Nissan introduced a subcompact SUV crossover in 2019 called Nissan Kicks .
Growing share in China market:
The market share of Nissan Motors in China market has grown sharply compared to its other markets. China is strategically the most important market for Nissan. It offers a very large customer base and also has strong infrastructure. Moreover, auto companies can find raw material and labour at cheaper rates in China. It is why companies are investing in developing research and development as well as manufacturing infrastructure locally.
This helps them reduce the production costs and create designs and models according to the taste of the local customers. Market share of the company increased by 0.3 points to 5.9% from the previous year. Total car sales of Nissan in China in 2018 grew to 1564,000 units. Sales growth could be attributed to growing sales of X-Tail and Sylphy Zero Emission models. China is strategically the most important market not just for Nissan but for its other competitors too.
Power of Strategic Alliance:
Nissan has continued to leverage the power of the alliance between Nissan, Renault and Mitsubishi. The strong alliance between the three brands has helped them achieve higher efficiency and sales as well as expand their markets. The alliance was founded in 1999 and is the world’s largest and most long lasting alliance between auto firms. Apart from having sold more than 10.76 million vehicles , the alliance operates across more than 200 markets worldwide. In 2017, the alliance invested around 5.7 billion Euros in synergies.
The alliance allows the three brands Nissan Renault and Mitsubishi to invest and share resources across key areas including operations and Research and development. This is beneficial for the three partners allowing them higher scale and market reach. In 2018, the alliance announced higher convergence in key functions including engineering, manufacturing, purchasing quality/total customer satisfaction (TCS), aftersales and business development. In this way, while the companies will be able to accelerate their research and development on electrification and latest technologies like AI and autonomous driving, on the other the synergies they create will help them expand their market base and grow their market share.
Strong Cash-flow :
In 2018, sales of automobiles decreased. Nissan’s operating income and net income also decreased. However, cash flow from operating activities maintained at healthy level. Cash flow from operating activities reached 1,450.9 billion Yen in 2018 compared to 1,071.25 billion Yen in 2017.
WEAKNESSES:
Product recalls :
Auto brands all over the world are dealing with a high number of laws and regulations related to product quality and passenger safety. Laws are particularly stringent in the U.S. and some other Western nations. Even a minor glitch can become a cause of investigation and can lead to losses worth millions. Over the past 3-4 years, Nissan was also forced to make a large number of recalls. According to the Kelly Blue Book, the company recalled around 3 million vehicles in 2016 over airbag issues. The recalled models included 2016-2017 Maxima, 2013-2016 Altima, NV200, Leaf, Sentra and Pathfinder, 2014-2016 NV200 Taxi, 2014-2017 Rogue, 2015-2016 Murano and Murano Hybrid, and 2014-2015 Pathfinder Hybrid vehicles.
In 2018 and 2019 also, the company had to deal with a large number of recalls. these recalls ensure passenger safety but can also affect the brand’s image and reputation. Moreover, Nissan had to maintain and fix several parts free of cost. In this way, such recalls also add to the operating costs of Nissan. In 2018, the company was reported to have recalled more than 215,000 vehicles including cars and SUVs due to fire risk. Nissan advised vehicle owners to not park their cars in the open. The recalled vehicles included certain 2015 to 2017 Nissan Murano, 2016 and 2017 Nissan Maxima, 2017 through 2018 Nissan Pathfinder and 2017 Infiniti QX60 vehicles.
Again in 2019, Nissan was reported to recall more than 91,300 of its Titan pick-up trucks over risks of vehicle crash. According to consumer reports, the company recalled more than 91,300 of its 2017-19 Titan pick-up trucks over because an electrical short could make the engine stall and put the vehicle at risk of crash. Moreover, the company launched a service campaign in August 2019 to avoid recalling more than 200,000 Nissan Altima vehicles in the U.S.A. The issue came to the notice of NHTSA and Nissan in 2018. However, while it has still not led to a recall, it could lead to a recall campaign once investigation by NHTSA is completed. The problem in this case was that around 200,000 of Nissan Altima midsize vehicles might have their suspension systems compromised prematurely because of corrosion.
Management Issues:
Following the arrest of Carolos Ghosn over a financial scandal, the problems of Nissan have deepened. It has brought a large number of problems with it including an internal investigation and reformation of the companies weak corporate governance structure. Before his arrest in relation to the sea dal, Carlos Ghosn was hailed as a hero in Japan. Nissan was at the brink of bankruptcy in 1999 and carlos Ghosn turn the company around. However, recently, he was arrested for financial misconduct and also removed from his position of the chairman. Chances of Nissan’s alliance with Renault faltering grew after the arrest of Ghosn. The arrest also brought to light several problems with Nissan’s board and its governance structure. While the company has taken several important steps to overcome the situation, it still has a long way to go in terms of corporate governance best practices. Nissan has acknowledged that the crisis has hit it financially.
OPPORTUNITIES:
Asian markets :
The Asian markets present a major opportunity before Nissan. Especially China, which has become the largest automotive market in the world presents a strong opportunity for sales growth. Moreover, Nissan must focus upon developing a strong infrastructure locally. If it wants to grow its sales in the China markets, then apart from growing its local manufacturing and R & D network, it should focus upon researching local trends. Producing more vehicles locally will help the brand bring manufacturing costs down. Simultaneously, the company will be able to grow its local sales by catering to the demand and taste of Chinese customers. The demand for electric cars has grown in China. In 2019, total sales volume in the Chinese car industry dropped compared to the last year. However, Nissan’s sales still grew which was because of the release of new electrified models. So, its sales performance was good despite the difficult situation in the Chinese markets. China can prove a great market for Nissan, given the brand invests in its local production and sales network.
Electrified cars:
Around the world, the sales of electrical vehicles have grown fast in the last three years. In the first two quarters of 2019, Tesla’s sales grew sharply. Nissan also experienced a rise in sales of its electrical models. The auto industry overall, saw reducing car sales in 2019 compared to the previous year. However, the sales of electrical cars still jumped. This shows that the demand for electric cars will continue to grow in the coming years. Nissan has extended its portfolio of electrified cars in recent years. However, with growing demand for such vehicles, this segment will require special focus if Nissan wants to maintain its lead. The company has experienced a drop in demand in the U.S. market. The best way to grow its demand again there is to invest in the electrified vehicles and the latest technologies.
Research and innovation:
Competition has increased a lot in the automobile industry. the best way to find growth amid a difficult situation is to invest in the latest technologies and improving the product portfolio. The industry has experienced growth in demand for electric cars. Apart from that, digital technology and autonomous driving technology have also acquired higher popularity. In such a fiercely competitive environment where all its rival brands and especially, the U.S. brands are investing heavily in customer experience and growing the attractiveness of their portfolio through investment in research and development, Nissan should also increase its R&D expenses. This will help grow both demand and popularity. In the fiscal year 2017, the R&D expenses of Nissan were 495.8 billion Yen. On the other hand, a close rival Honda spent 691.43 billion Yen during the same fiscal year. Nissan must grow its R&D investment, if it wants to maintain its competitive advantage and grow sales faster.
THREATS:
Competition:
Competition has kept growing intense in the automobile industry. A large number of brands with extensive global presence are there in the global market. The rivals of Nissan including Honda, Ford, Toyota and others invest heavily in R&D, marketing and sales so as to grow their market share. These car brands invest heavily so as to maintain their lead in the global auto market. In fiscal year 2018, net sales of Nissan Motors in the global auto industry decreased by 4.4% compared to the last year. Its total vehicle sales came down to 5.5 million units in 2018. Total market share of the brand also decreased by 0.2% and came down to 6% in 2018 compared to last year. Nissan will need to strengthen its competitive advantage to retain its market share and level of sales. Its alliance with Renault and Mitsubishi has proved helpful but the company is dealing with a large number of problems. To retain market share, the company will need to invest heavily in strengthening its competitive position.
Regulatory threats:
Regulatory pressure on the automobile manufactures has grown a lot during the last several years. Companies are now under increased surveillance and higher pressure related to product quality and passenger safety. Apart from these, the laws related to emissions and labor have also grown much more stringent causing a growth in operating costs. Nissan was forced to make a large number of recalls during the previous there years. It also launched a device campaign to avoid a major recall in 2019. In this way, increased legal pressure has also resulted in higher compliance cost. Moreover, legal barriers are making it difficult to find growth and increase market share. So, regulatory pressure is one of the leading threats, the automotive firms including Nissan Motors are facing.
Changing industrial environment:
Globally, the automotive industry has entered a difficult phase in 2019. Nissan had experienced sales decline during 2018. In 2019 also, demand throughout the globe has decreased. Sales of electric cars have grown worldwide but overall vehicle sales have reduced. Moreover, consumers’ taste and demand patterns have changed. Demand for SUVs and hybrids has risen fast in recent years. Nissan is dealing with a large number of internal problems. Moreover, its R&D budget has remained much lower compared to its nearest rivals. All these things are making it difficult for the brand to expand its market share. However, its alliance with two other brands has been an important support when the industry is transitioning into an era of autonomous driving and electrical mobility. Apart from investing heavily in research and development, it will also need to focus upon marketing and understanding consumers’ taste in various parts of the world.
Conclusion:
Nissan is one of the leading Japan based car manufacturers. Despite lower car sales and reduced market share in 2018, the company maintained its revenue and a healthy cash flow. Sales of its electrical cars have increased. In the Chinese market, it was able to retain its market share and sales by releasing new electrical models. Its alliance with Mitsubishi and Renault has also worked. The alliance is present across 200 countries and has sold more than 10 million vehicles. The company is planning to grow the level of synergy among the partner brands in the alliance for higher returns on its research and development investment. However, since the arrest of Carlos Ghosn in a financial misconduct case, a large number of its internal problems have come to light. The company was also hit financially after the scandal was unearthed. These things could make growth of the brands in future difficult. However, Nissan must continue to focus upon growing its portfolio of electrical cars and continue to invest in autonomous driving as well as AI and other latest technologies. Its market share in the U.S. has also kept falling. There are a large number of troubles before Nissan Motors right now. However, the company has managed a strong position in China which could help it overcome some of the pressure. To find faster growth, it needs to focus upon research and innovation as well as strengthening its competitive advantage.
Other Sources:
Nissan Annual Report 2017.
Nissan financial results full year 2018.