Ever since Carlos Ghosn became president at Nissan Motor (NSANY) in 2000, Japan's second-largest auto maker has enjoyed the kind of recovery that bosses at strugglers like GM (GM) must dream about. Just as important, though, has been the way Nissan has spiced up its product offerings. Today a river of eye-catching autos -- from the stylish Murano crossover and new Infiniti M luxury sedan to the boxy Cube minivan -- streams out of Nissan's factories.
Just as impressive, under a program called V3P, Nissan is halving the time needed to take new cars from design to showroom. For the Japanese market, the Note subcompact was rolled out just 10.5 months after its design was finalized, vs. the 20.75 months that the process used to take. Key to the faster delivery has been wider use of the latest in computer-aided design software and a reliance on fewer prototypes.
To find out more about how Nissan aims to give customers what they want faster, BusinessWeek Tokyo correspondent Ian Rowley caught up with Nissan's Carlos Tavares, the executive vice-president who supervises design, product planning, and corporate strategy, at the company's Tokyo offices. Tavares, 47, joined Renault -- 44% owner of Nissan -- in 1981 before moving to Nissan in 2004.
How does Nissan approach new vehicle development?
Ultimately, the process is about regularly creating exciting cars without disrupting the [production] process. We don't want a situation where we are putting so much pressure on the design teams that they have to keep using the existing parts and platforms and not be able to meet customer needs. This discussion between creativity on one side and disciplined, accurate implementation on the other is one of the most exciting things within this company.
But where does the process begin? Is it with a group of engineers?
Well, we actually put a lot of energy into trying to address the automotive answer as late as possible in the process. A lot of people in our organization are engineers and we tend to think about hardware answers or hardware solutions much too soon in the process. We need to first ask who will be our focus customers.
How do you do this?
We look at different groups and demographics and decide which people we will target.
So how big are the customer segments you focus on?
It can be quite a small number of people -- you might think we'd only sell 50 cars -- but this [partly explains] why most of our products are very strong. It might sound a little crazy to make a tailor-made car for a small number of people, but what we look for is to make a car for a very particular type of person.
We're not talking about a million people but small groups with the same kind of emotional needs, education, mindset, and so forth. You then make a car for them. If you succeed and make the right car for these people, other people from outside the group will say they would also like to have one.
What about after you've identified the customers?
We then check that the designers and the product planners understand the concept in the same way. We listen to the designer and we listen to the product planner. We have a meeting where each one explains to us how he perceives the target customer, how he perceives the emotional values, the functional values, the mindset. If they don't see things the same way, you can be sure there will be a mess.
How do you avoid that?
We tell them to go back to work and come back when they share the same vision of the target customer. If you have to postpone [moving on to the next stage] by two, three, or four months because people are not talking about the same target customer, it's no problem.
Is there any resistance to focusing so heavily on aspects other than engineering?
It's very important that you have a very strong [production] process that gives you the possibility to combine the talent of the designers, the product planners and the market intelligence people. But I'm convinced that automotive companies that are uniquely engineering-driven are in danger.
What about speed to market?
That's the strength of our engineering and manufacturing. If you put things in the pipeline properly -- and you have to do this properly and with good design, planning, and features outlining performance targets -- this company has huge strengths in terms of engineering and manufacturing.
But are you getting faster?
Yes. Our engineers have worked a lot at what we call V3P, a system which involves compressing the latter stages of development and manufacturing [from the moment the designs are fixed]. We're close to ten months in some Japanese products. This is very fast -- it's half of what it was before.
How do you do this?
One example is that by using sophisticated [computer software] we can decrease the number of mistakes and increase quality. That helps save time. We've also reduced the number of prototypes from three to one for the Note [a subcompact sold in Japan].
But you delayed the new Sentra. That's hardly an example of speeding things up.
If you look at the economics, the costs to fix a problem while the car is in development, vs. losing 20%-30% of your volume for four or five years once it hits the showroom -- there's no discussion. Of course, it creates some trauma if you postpone. But it's also a significant opportunity to improve.