Nissan has announced a full-electric replacement for the Micra that will be underpinned by Renault’s new CMF-BEV platform. When is that coming?
In 2024 to 2025. Let me give you some of the background on that. When I visited Renault’s R&D center [in Guyancourt, France,] I saw the cars, I saw the platform, and some executives started to say, “It would be great if we have more volume.” I said, “OK, but it has to be in Nissan cars.” After some discussion we decided to go with the Micra replacement. That gives us the opportunity to have a full-electric small car, which covers a big part of the market since that segment still accounts for more than 20 percent of the overall market in some countries. Alone, we are not big enough, but when we are two the volume increases resulting in a cost advantage. From a marketing and customer point of view, it also gives another entry to the brand through EV. Without this, the entry point is the Juke [small SUV].
What target price for electric Micra do you need to reach to achieve meaningful volume?
We want it to be below 30,000 euros.
What are customers looking for from a small EV?
You have two types of customers: One is a green-conscious, early adopter who is ready to pay a bit more. The other is a more fiscally conservative buyer who is focused on the car’s total cost of ownership.
What levers do you have to reduce that total cost of ownership?
We are totally changing is our approach. Instead of speaking about the base price of the car, we talk about monthly payments. Because the residual value is higher on EVs, the cost to finance is less than the increase of the list price [compared with combustion-engine cars]. In addition, range anxiety is less of an issue in the small segment because the average distance that people in this segment is lower than in others. So, if we are able to make the total cost of ownership lower than for cars with internal combustion engines, it would work.
How do you improve residual values?
This is extremely complex and fascinating. The residual value is something that you can influence by the way you act. You need to make sure that the behavior of the automaker is proper with regards to the new car, because if it is discounted then the original value is impacted. You need to make sure that you don't overproduce by more than your demand. The final crucial item is the cost of maintenance, of energy consumption and of insurance. If you can get the monthly payment in the 250 to 400 euro range, you appeal to 80 percent of the market. There is another impact on the residual value and that is the value of the battery at the end-of-life. That's a new strategic channel we are looking at because suddenly you can boost your residual value by 1,500 to 2,000 euros.
Could you better control residuals by moving to direct sales?
You can if you take back the car. The key thing is who owns the residual value and who owns the used car at the end?
Does Nissan want to own that used car?
It depends. Different schemes can work, so that is something we need to examine. At the moment, with demand being higher than production, residual values are much higher than they have even been. Therefore, our dealers have a huge appetite for used cars.
Isn’t it true that the chip crisis has helped create this situation?
What we have learned from the semiconductor shortage is to find balance. Today, we don't have enough volume to sell, which is a challenge. But the crisis has taught us to make sure that we align demand with an equal level of production or slightly lower.
Nissan previously was less disciplined on pricing. Are you going to be more disciplined in the future?
We have to be because the sensitivity over residuals has increased. Today, we are priced a bit higher than the market, and we have an order bank that is growing. To me that says we have pricing power. We want to move from volume to value. In some cases, in the past, the customer purchase intention was lower than our market share. When you are in that situation you push too much [by offering discounts]. We want to make sure it's the other way round.
Could you update us on what is happening with Nissan’s operations in Russia?
The footprint we have there includes our plant in St. Petersburg and 2,000 employees. We have a sales and marketing team in Moscow. We are keeping our people, but we are stopping production. (At press time, Nissan’s operations in Russia remained suspended. Its workers are still being paid, in line with Russian regulations. Nissan’s sales and marketing operations in Ukraine are running again and dealers there are open where conditions allow.)
What do you need to happen to start restart production?
The first thing we need is parts. We don't have parts
I guess you're quite localized in Russia, right?
You are never fully localized. Building a car is complex. Today we can't get hold of parts from outside of Russia.
How profitable was your business in Russia?
That's not something we disclose. It’s a good business, but it’s 50,000 units within a company that does 3.8 million.