Nissan Adopts Strategies from Chinese Suppliers to Reduce Costs

## Nissan’s Focus on Cost Competitiveness

Nissan Motor is actively evaluating the cost competitiveness of Chinese suppliers as part of a wider initiative to reduce variable costs by ¥250 billion (approximately R30 billion). This strategy is being driven by a comprehensive efficiency drive outlined by a senior executive.

### Learning from Chinese Suppliers

Tatsuzo Tomita, who leads Nissan’s total cost transformation efforts, shared insights on how the company is adopting lessons from the practices of its Chinese suppliers. These suppliers are known for their use of standardized parts and strong collaboration with designers.

“We have gained insight into the Chinese approach to operations, and my goal is to determine how to implement those practices for our current and future vehicle parts,” Tomita explained during a meeting with reporters at Nissan’s headquarters in Yokohama.

### Aiming for Significant Cost Reductions

Nissan is currently engaged in a major turnaround plan, which encompasses the reduction of around 20,000 jobs and the consolidation of seven manufacturing plants. The automaker is targeting a total cost reduction of ¥500 billion by March 2027. This goal includes halving fixed costs and significantly cutting variable expenses to achieve an operating profit and positive cash flow in the automotive sector.

Tomita emphasized that the intention is not to diminish the supplier base but to enhance collaborative efforts with partners. He noted the expansion of Chinese suppliers into global markets, including locations like Hungary, Morocco, and Turkey, indicating that Nissan might consider them as future partners in their international strategy.

### Achieving the Variable Cost Reduction

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While Tomita acknowledged the ambitious ¥250 billion target for reducing variable costs, he believes it is attainable if Nissan continues to harness momentum. The company has been gathering thousands of innovative ideas from its employees, which contribute to this progress.

The impact of these cost-saving measures is expected to become clearer by the end of this year or early next year, as results will vary based on each vehicle model.

### Realigning Global Design Operations

In a significant restructuring of its global design organization, Nissan announced plans to close design centers in California and São Paulo, along with scaling back operations in London and Japan. This reorganization is part of the comprehensive “Re:Nissan” initiative aimed at consolidating design efforts into five key hubs: Los Angeles, London, Shanghai, Tokyo, and Atsugi in Japan.

Nissan noted that the Los Angeles “Studio Six” will serve as the primary design hub for the U.S., while the London office will continue to support operations in regions such as Africa, the Middle East, India, Europe, and Oceania, in partnership with Renault.

### The Path Forward

The company has not provided specific figures regarding job losses resulting from these changes. Nissan’s CEO, Ivan Espinosa, who took the helm in April, introduced the “Re:Nissan” turnaround plan in May, which includes reducing global production capacity from 3.5 million vehicles to 2.5 million.

As Nissan moves forward with its ambitious plans, how do you think these changes will impact the company’s future?