By John D. Stoll
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 16, 2017).
For Carlos Ghosn, the auto industry's once-dominant philosophy
endures: Bigger is still better.
The chairman and chief executive of the
Nissan-Renault-Mitsubishi alliance is pushing ambitious targets for
the auto makers in an effort to leapfrog Silicon Valley and swipe
market share, even as some of his biggest rivals look to scale
back.
Mr. Ghosn said Friday he has set a goal of combined sales of 14
million vehicles for Nissan Motor Co., Renault SA and Mitsubishi
Motors Corp. by 2022, a 40% increase compared with 2016. He is also
planning 12 new electric cars, forays into robotaxi fleets and the
debut of a fully autonomous car within six years.
"With the explosion of technology that is coming, it is going to
make it very difficult for smaller players to follow," Mr. Ghosn
said. "You're going to have a premium for the large car
manufacturers because we are the only ones who are going to be able
to invest in all the fields, all the products, all the markets, all
the technology without making any shortcuts or without having any
blind spot."
The largest car companies currently sell 10 million vehicles
annually, but some, including General Motors Co., are cutting back
car-selling operations. Those companies want to free up capital to
compete with Alphabet Inc. and Apple Inc. in developing
shared-vehicle fleets or services that could allow, say, a car to
order your morning coffee or drive across country without any human
intervention.
While the auto industry's little guys have always struggled to
keep up, the big dogs have wrestled with their own demons.
Volkswagen AG long pursued the industry's crown, only to face
billions of dollars in penalties related to a U.S. regulatory
scandal. It used software to cheat on diesel-emissions tests, a
result of a grow-at-any-cost philosophy that claimed Detroit's auto
giants a decade earlier.
Toyota Motor Co. previously had its own regulatory hiccups,
which contributed to President Akio Toyoda calling a temporary
timeout on expansion plans.
Even some of Mr. Ghosn's top executives have advocated for a
more modest pace.
"We are going to have slow-and-steady growth," Nissan CEO Hiroto
Saikawa recently said in an interview. Mr. Saikawa took over from
Mr. Ghosn earlier this year. For the past five years, Nissan chased
an ambitious goal set by Mr. Ghosn of achieving both an 8% share of
global car sales and an 8% profit margin. It fell short on
both.
Mr. Ghosn acknowledges the need for caution, but says his
projections are based on expectations for growth in Brazil, Russia
and other emerging markets, after recent turmoil when executives
invested billions to capitalize on auto sales momentum that never
materialized. In an interview Thursday, he reiterated that the
company is well positioned in these countries, including ownership
of a Russian auto maker.
The company also expects further growth in electric vehicles,
and plans to launch 12 new EVs by 2022 on a common engineering
platform. Mr. Ghosn says the payoff will ride on how governments
around the world decide to incentivize sales of battery-powered
cars and infrastructure development.
Nissan-Renault is also banking on China's auto market continuing
to expand, recently inking an electric-vehicle partnership with
local car company Dongfeng Motor Group. Even if volumes grow in
China, foreign firms are having an increasingly difficult time
competing against local companies, which receive government tax
breaks and are waging a price war with cars and trucks that are
more competitive.
GM had long pursued the size and scale that Mr. Ghosn champions,
but this year Chief Executive Mary Barra dumped the auto maker's
money-losing European operation and is retreating from India --
moves that followed the purchase of a Silicon Valley startup and a
stake in ride-hailing firm Lyft Inc. Stung by a 2009 bankruptcy,
Mrs. Barra's lieutenants now vow to only play where GM has
assurance it can win.
"There were big things we couldn't pursue," GM President Dan
Ammann said in an interview following the Europe sale. "I think
we've led the way on breaking that industry behavior," he said,
referring to the chase for market share.
Nissan-Renault, meanwhile, sees bigger volumes as the only way
to fund projects aimed at meeting increasingly stringent regulatory
demands and customer expectations that their vehicles operate like
a smartphone: always connected, with a battery that quickly
charges. The company already sold 500,000 electric Leafs, outpacing
Tesla Inc., and its latest semiautonomous driving software goes on
sale in the U.S. this fall.
Mr. Ghosn forecast a doubling of so-called synergies from the
alliance by 2022, reaching EUR10 billion ($11.9 billion) by that
time. More engines will be shared among group members, and vehicle
platforms will be stretched further.
The company will launch a fully autonomous car by 2022, he said.
Between now and then, the alliance will invest heavily in the
technology needed to revolutionize car ownership, Mr. Ghosn said,
and returns could begin flowing later in the decade.
--Mike Colias contributed to this article.
Corrections & Amplifications Nissan-Renault expects to
introduce a dozen electric cars off a common engineering platform
by 2022. An earlier version of this article incorrectly spelled the
company as Nissan-Renualt. (Sept. 15, 2017)
Write to John D. Stoll at john.stoll@wsj.com
(END) Dow Jones Newswires
September 16, 2017 02:47 ET (06:47 GMT)
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