■NISSAN MOTOR CO Tokyo Sales Holdings <8291> Medium-term Management Plan

3. Key Initiatives of the Medium-term Management Plan

The medium-term management plan is progressing smoothly, with the continued run of three key initiatives: becoming a leader in electrification, safety and driving assistance technology, and mobility business. To achieve this, there are plans to also enhance the store network that serves as the foundation for these key initiatives.

(1) Leader in Electrification

Being a leader in electrification means leveraging strengths as a pioneer of electric vehicles like EVs to spread the excitement of driving electric cars and directly contribute to the promotion of Carbon Neutrality. Despite no significant entry by other domestic manufacturers, consumer interest in EVs is high, and the desire to purchase EVs is increasing. Therefore, the company plans to leverage over 14 years of accumulated know-how and infrastructure in EVs such as sales and marketing systems, maintenance systems and facilities, and rapid Charging Gun networks to achieve an electric vehicle sales ratio of over 90% (already achieved with the possibility of upward revision) and annual sales of 10,000 EVs. To this end, plans are in place to further strengthen the sales of EVs such as Sakura, Leaf, Ariya, and new models expected to debut in the future. Additionally, by aiming to reduce CO2 emissions by 0.016 million tons through EV sales and build a store network utilizing renewable energy for disaster response via EV power supply, the company intends to enhance its direct contributions to the environment and society.

(2) Safety and Driving Assistance Technology

The company aims to provide more customers with peace of mind and safety through advanced safety and driving assistance technologies, as well as daily support backed by maintenance systems. To this end, the deployment of 1,400 test-drive vehicles will increase test-drive opportunities at stores along with utilizing 'e-Share Ammo' to broaden the chance for customers to experience advanced driving assistance systems like ProPilot. Furthermore, the company is also planning to equip all stores with onboard diagnostic devices, introduce the latest maintenance equipment to obtain certification for a specific maintenance system, further enhance the technical skills of already seasoned mechanics, and establish systems for "Electronic Control System Maintenance" directly linked to safe and secure car life. ProPilot is standard equipment or available as a Single Option in 97% of major vehicle models, but the current version 2.0 of ProPilot has evolved from version 1.0 to enable features such as lane changes and hands-free driving on highways linked with navigation systems. However, it still has limitations, such as the necessity for the driver to constantly monitor the system.*

*For details, please refer to the company's or NISSAN MOTOR CO's official website.

(3) Mobility Business

By strengthening the mobility business, the company aims to accurately respond to the trend of shifting from ownership to leasing and sharing. The personal lease program "P.O.P", launched in 1997, utilizes sales know-how as best practices across the company, appealing to customers' benefits, thereby improving usage and retention rates and promoting vehicle replacement. As a result, "P.O.P" has started to grow rapidly as a business that contributes to the company's new car sales expansion through early replacements, with further growth expected in the future. Additionally, in response to the good performance of "P.O.P", the company has entered the used car personal lease market, which has also had a strong start. In the mobility business, the company is equipping all locations with NISSAN rent-a-car and increasing the number of units in operation, while NISSAN MOTOR CO has integrated the car-sharing service "e-Share MoBi" into the NISSAN rent-a-car. Through these initiatives, the company aims to enhance convenience and expand opportunities for customers to operate electric vehicles like EVs and experience cutting-edge technologies such as ProPILOT 2.0, fostering an understanding of the company's EVs and e-POWER.

(4) Store Network

Stores are key touchpoints that provide exciting experiences from visiting to delivery while responding to diverse customer needs. Therefore, the store network serves as a foundation for implementing key initiatives, and store renovations and new openings based on the "Nissan Retail Concept" can be considered strategies comparable to major strategies. In the fiscal year ending March 2023, there were 9 renovations, in the fiscal year ending March 2024, 1 renovation, and in the second quarter of the fiscal year ending March 2025, 4 stores will be renovated and opened, steadily executing the plan. Additionally, as a new touchpoint, the active incorporation of digital technology to explore new sales methods for automobiles is being considered, which may not happen in the near future, but there is a possibility that new touchpoints will become one of the main sales channels.

4. Investment Plan

In the medium-term management plan, the company plans to actively invest in both existing fields and focus areas, executing a total investment of 30 billion yen over four years. The breakdown includes 25 billion yen for network renewal, environmental measures, and business portfolio restructuring to strengthen existing businesses for sustainable growth, 2 billion yen for enhancing efficiency/productivity and diversification of businesses through IT and best practices as a driving force for transformation, and 3 billion yen for expanding business areas through new business entry and capital business partnerships, including mobility-related and EV peripheral businesses. Through these investments, the company aims to enhance profitability, planning for an ROE of 7.0% in the fiscal year ending March 2027. Therefore, it aims for an operating margin of 4.2% through network renewal, new customer contact point establishment, and efficiency investments, an ROA of 3.4% through profit expansion investment and effective use of assets (compression of unnecessary assets), and aims for a D/E ratio of 0.26 while ensuring financial safety and optimizing the capital structure. However, since half of the total investment amount, which equals 15 billion yen, was invested in advance in the first year, some results have also been realized ahead of schedule.

(Author: FISCO guest analyst Nobumitsu Miyata)