Nissan Motor Co Ltd is intensifying its efforts to enhance cost efficiency by studying the practices of Chinese suppliers and integrating their methods into its global operations. The Japanese automaker aims to reduce variable costs by 250 billion yen ($1.71 billion) as part of a broader efficiency initiative, according to Tatsuzo Tomita, Nissan’s chief of total delivered cost transformation. Tomita highlighted the effectiveness of Chinese suppliers in utilizing standardized parts and fostering close collaboration with designers, practices that Nissan is now exploring for its current and future vehicle parts. This strategic move is part of Nissan’s ongoing turnaround plan, which includes cutting approximately 20,000 jobs and consolidating seven plants. The company has set an ambitious target of achieving 500 billion yen in cost reductions by March 2027, with half expected to come from fixed costs and the remainder from variable costs. The initiative aims to secure operating profit and positive free cash flow in Nissan’s automotive business by the same deadline. Following the announcement, Nissan’s shares rose by 1.6%, reaching their highest level since late May. Tomita emphasized that the company is not reducing its supplier base but rather strengthening collaboration. He noted that Chinese suppliers are expanding globally, with operations in Hungary, Morocco, and Turkey, and are being considered as potential partners in Nissan’s international strategy. While acknowledging the significant challenge of the 250 billion yen variable cost reduction target, Tomita expressed confidence in achieving it by maintaining the current momentum and sourcing innovative ideas from employees. The impact of these cost-saving measures is expected to become more apparent by the end of this year or next year, varying across different vehicle models.
Nissan seeks to learn from Chinese supplier strategies as part of cost-cutting drive
