LONDON -- Nissan has reinstated Europe as a "core” global market as the automaker recovers from its business crisis in 2020, when it shrank its footprint in the region to concentrate on the U.S., China and Japan.
Nissan has successfully tackled the underlying cause of its unprofitability in Europe after launching new models and cutting costs, Chief Operating Officer Ashwani Gupta said.
Now that it is on solid footing in the region, Nissan has changed its investment approach from the strategy it announced in May 2020 in the Nissan Next emergency restructuring plan, Gupta said.
"Europe was not one of our core markets when we started Nissan Next, but it is core now” Gupta said on the sidelines of Renault and Nissan’s event here on Monday to present their revamped alliance.
Nissan said on Thursday that its operating profit in Europe was 4 billion yen ($31 million) in the quarter that ended Dec. 31. That is double the amount in the same period in 2021. In the first nine months of Nissan’s fiscal year, which ends March 31, its operating loss in Europe was 2.1 billion yen, which compares favorably to 2021, when its loss was 22.2 billion yen.
Europe cuts
Under the Nissan Next plan, the automaker reduced its global capacity by 20 percent, trimmed the number of models by the same amount, and sharply cut fixed costs.
With losses piling up during the coronavirus pandemic in 2020, Nissan redeployed investment to "globally competitive” markets, and as part of cost cuts in Europe shut its plant in Barcelona.
The restructuring has worked in Europe, and the company is "no longer struggling for profitability as we used to,” Gupta said.
Nissan cut fixed costs in the region by 30 percent by overhauling manufacturing and engineering operations. In addition to closing the Barcelona plant, Nissan cut jobs at its factory in Sunderland, England.
Read more: Nissan asks UK to help ensure future of Sunderland plant
The company has boosted revenue per unit by more than 18 percent, Gupta said, after launching new versions of the Juke small SUV, the Qashqai compact SUV and the X-Trail midsize SUV.
Lower fixed costs in the region "transforms into profit,” Gupta said, but he added that profits in Europe were still below those of Nissan in the U.S. because of the company’s greater economies of scale there.
Nissan in 2021 said it would invest $1.4 billion at Sunderland to build a full-electric SUV to replace the compact Leaf EV, as well as partnering with China’s Envision AESC to expand a battery plant on the site.
Nissan’s passenger car sales fell 4.9 percent last year to 238,062 in Europe, with a 2.2 percent market share, according to market analyst Dataforce and trade group ACEA. The Qashqai, built in Sunderland, was its best-selling model at 116,203 units, up 10 percent from 2021.
The company’s high point in Europe was in 2015, when it sold about 560,000 cars in the region, according to ACEA, and had a 3.9 percent market share.
Help from Renault
Nissan will look to Renault to help grow both sales and profitability in the region as part of the rebalanced alliance, CEO Makoto Uchida said on Monday at the same news conference. Nissan will invest up to 15 percent in Renault’s new Ampere standalone electric division as it looks to exploit synergies in the alliance.
"We are looking at how can we boost that opportunity,” Uchida said, although he did not commit to a time frame or the exact amount of the investment. "Working with Ampere with Renault is the next stage we are talking about.”
Renault will develop and build an electric replacement for the Micra small car from 2026 that will have 80 percent parts commonality with the coming Renault 5.
Nissan will also have a version of Renault’s full-electric FlexEVan for its Mobilize division, also due in 2026. Renault has become Nissan’s light-commercial van supplier after the closing of the Barcelona factory, where Nissan built the NV compact model.
