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YOKOHAMA, Japan (Reuters) -Nissan Motor is studying the cost competitiveness of Chinese suppliers and exploring ways to apply their practices globally, as it aims to cut variable costs by 250 billion yen ($1.71 billion) in a broad efficiency drive, a senior executive said.
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Tatsuzo Tomita, Nissan’s chief of total delivered cost transformation, said the Japanese automaker was drawing lessons from its Chinese suppliers’ use of standard parts and their close collaboration with designers.
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“We’ve gained access to Chinese-style ways of working, and my current challenge is figuring out how to apply those methods to parts for our current and upcoming vehicles,” Tomita told reporters at Nissan’s head office in Yokohama on Wednesday.
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As part of its ongoing turnaround plan that includes cutting about 20,000 jobs and consolidating seven plants, Nissan is targeting 500 billion yen of cost reductions by March 2027.
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Half is expected to come from cuts to fixed costs and the remainder from slashing variable costs as it works to secure an operating profit and positive free cash flow in its automotive business by the financial year ending in March 2027.
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Tomita said the company was not looking to shrink its supplier base, but to strengthen collaboration.
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He noted Chinese suppliers were expanding globally, with operations in Hungary, Morocco and Turkey, and said Nissan was considering them as potential future partners in its international strategy.
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While acknowledging the 250 billion yen variable cost reduction target was “massive,” Tomita said it could be achievable if Nissan maintained its current momentum, which it had been building by sourcing thousands of ideas from employees.
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The impact of the cost-saving measures was likely to materialise more widely by the end of the year or next year, as it differed from vehicle to vehicle, he added.
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($1 = 146.5200 yen)
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(Reporting by Daniel Leussink; Editing by Jamie Freed)
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