Nissan Races to Make
Smaller, Cheaper Cars
David Rogers, Bobby Roeckner, Aubrie Stechschulte,
David Warsinskey, Jason Scott
“To sell an expensive- looking car for the
price of no- frill models, and somehow
make a profit on it.”
Demand of Smaller Vehicles is increasing
because of rising gas prices.
Drivers trading “Gas Guzzling” SUV’s for
smaller models.
New Mission
Demand is expected to
grow 30% to 27
million vehicles by
2013
SUV’s demand is
expected to drop 4%
to 10 million vehicles.
This new shift is a challenge that no car
maker has managed to make yet.
Trucks and SUV’s earn 10%- 20% profit
margins. About $2500- $5000
Best selling smaller cars earn just 2%-
3%. About $300 per car.
Most makers consider to be lucky to break
even on small cars.
Nissan is aiming to make stylish cars with
a starter price of $7000- $10000.
Eventually reduce price to $5000.
Nissan is exploring making a $3000 car
with the help of electric rickshaws
makers.
Goals
Nissan’s plan to get under $7000 is
controversial.
The quality of the car will come into
question.
Cost structure is said to be not feasible.
Nissan’s Chief Product Strategist Carlos
Tavares is determined to accomplish this
goal.
Nissan was on the brink of bankruptcy in
1999.
To turn profits around, they relied on big
models that have high margins in the US.
At the same time they fell behind in the
world market.
Last year they only offered one model in
India, which sold only 199 cars.
Nissan used the modeling techniques of
the Renault’s Logan to design the Nissan
Tiida.
Used simpler parts:
1. Continuous bumper and grill
2. Similar left and right mirrors
3. Less curved windshields
This results in lower costs
Nissan’s Secret Weapon
Nissan’s Tiida Vs.
Renault’s Logan
Nissan is also moving production to low-
cost areas.
Using more local suppliers in place of
longtime Japanese suppliers.
This year at the Thailand plant, Nissan cut
imported Japanese parts from 30% to
10%.
Questions?