Porter’s Five Forces Analysis of Nissan
Key Facts
| Name | Nissan Motor Corporation Ltd |
| Industry | Automotive, Consumer Durables, Motor Vehicles & Parts |
| Founded | December 26 ,1933 |
| Headquarters | Nishi-ku, Yokohama, Japan |
| CEOs | Makoto Uchida |
| Revenues | US$ 79.2billion,2021 |
| Profit | US$ 1.1billion, 2021 |
| Competitors | Toyota ,Ford,Honda,Chevrolet,Volkswagen |
Company Overview
Headquartered in Yokohama, Japan Nissan Motor operates in Automotive and Marine Equipment operating globally more than 190 countries selling car range including pick-up trucks, SUVs and light commercial vehicles. Nissan Motor was founded in 1933 in Yokohama City. Nissan has following major brands included Nissan, Infiniti, Datsun and Nismo|Autech. Nissan Motor reported a record revenue of 8. 4 trillion Japanese Yen approximately US $ 74.99 billion with a net profit of UD $ 1.91 billion, for Year 2021. Fortune 500, ranked Nissan 161 by Fortune 500 as of 2022 and 408thin World’s The Global 2000 Companies list by Forbes.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis is a widely used model to evaluate companies’ strategies in reference to its industry for neutralizing the competition and increase the margins, it is developed by Professor Micheal E. Porter in 1979, at Harvard Business School.
Nissan Rivalry among Existing Competitor
- Global Automobile Industry: The global automobile industry experienced a growth by 1.8% which is 78.36 million units, while Nissan experienced a drop in the global market share from 0.4 points to 4.9% compare to prior year.
- Nissan Business Sales Segment: Nissan operates in Automotive and Marine Equipment through two reportable segments Automobile and Sales financing, while Net Sales further comprises of Sales to third parties and Inter-Segment Sales and Transfers.
The Nissan group sold a record number of 3,876,000 units in FY 2021 and experienced a drop of 4.3% compared to previous year due to semiconductor shortage. The Medium Car segment contributed 32% of Nissan’s revenue.
- Nissan Business Geographical Division& Sales Volume in Y-2021: The main geographical division for Nissan sales is Japan experienced a drop of 10.3% in sales volume, in China experienced a decrease 5.2% , North America, face a drop of 2.4%, USA face a dropped of 3.7% (USA, Canada and Mexico), Europe excluding Russia faced a drop of 11.9% (France, The United Kingdom, Spain, Russia and other European countries), Asia (China, Thailand, India and other Asian countries) and other overseas countries (Oceania, Middle East, South Africa, Central and South America excluding Mexico).
- Tesla Leading the Market: Tesla is tough competition to Nissan in US market and leading the market by generated record sales of US$ 53.8 billion in FY 2021 with Tesla Model 3 as categorized best plug-in electric vehicle for the year, declared by Statista. Tesla also categorized world’s most valuable car brand by projected value of 75.9 billion after leaving Toyota and Mercedes-Benz behind.
- Electric Vehicles – Competing Point and Product Differentiation: Nissan recently announced a 13 billion British Pound Sterling investment in it’s Sunderland Plant, England for making 23 new Electrical models by 2030, already a maker of Nissan LEAF.
Elon Musk’s Tesla is competing by Model 3 and Model Y and shifting 230,000 EVs per quarterglobally. It is a very close competition for same market and same market share between Nissan and Tesla.
- Mercedes-Benz is also competing in EVs and introduced a 4 battery electrical vehicle. The Mercedes-Benz ESQ electric flagship program with a record orders of 20,000 cars out of which 3600 cars projected to be in the market in January, 2022 is also get immense success.
Nissan Threat of New Entrants
- Global Electrical Vehicle Industry Year 2022-Year 2027 Projections: It is estimated that global electrical automotive industry will be projected to generate a revenue of US$ 384 billion in 2022. It is expected that revenue will annually growth by 17.75% from 2022 to 2027.The average price of an electrical vehicle is expected to US $ 53.09k. China will be the largest market for the electrical vehicles. There are two categories in electrical vehicles one is Battery Electric Vehicles and Plug-in-Hybrid Electric Vehicles.
- Other Major Factors: The new entrant will be requiring high capital investment, with extensive and sophisticated manufacturing-assembling structure. High Research & Development Cost to understand existing customer demand requirement for providing a better design &experience. Technological Advancement is happening due to electrification in car industry which again needs capital, research bodies and expertise in the fields to compete. Being High-End Technology, efficient distribution channel with customer servicing and part availability form a trusted brandis also crucial to launch. So over entry from a new player seems very challenging.
- Electrifying the world – Celebration of LEAF -10 Years Sales: A lot innovations are happening
in this area many startups are appearing ,while other automobile producers are taking this as a threat while Nissan is celebrating it’s leadership position in Electrifying the world by launching LEAF first mass-market electrical car in December 2010. Nissan delivered 500,000 LEAF vehicles from December 2010 to December 2020.
Nissan Bargaining Power of Suppliers
- Quality Distribution Channel – Focused New Areas – Electrification, Autonomous, Driving and Connectivity: Nissan is paying special attention to maintain it’s supplier quality globally. As due to electrification the and introduction of new technologies the car components and attached features are becoming complicated. For maintaining quality standard cutting-edge skills and close ties with the suppliers are necessary.
- Industry Educator and Trend Setter: Nissan in Supplier’s industry educator and trend setter for better and advancement of all so it is influencing suppliers substantially.
Nissan Bargaining Power of Buyers
- Leader in Electrification in Vehicle Industry – Product Differentiation: As Nissan already launched its first electric car in 2010 and being a leader in the car innovation it is being driving the customer experience so customers has no bargain power and advance knowledge.
- Customer Satisfaction – After Sales Services: Due to the nature of automobile industry customer satisfaction also includes after sales services and parts availability, as Nissan is producing high end product and highly electrifyingcustomer feedback, customer satisfaction and continuous innovation is important to retain the market shareNissan faced a drop by 2 points in 2021 by acquiring 78 points in U.S consumer satisfaction index Nissan 2006-2021.
- Full Information via Digital Channels with High Switching Cost: As purchase of a vehicle is a long term considerable research decision, associated high switching cost with the excess of digital information is available via digital channels, buyers have the bargain power only in terms of their buying decision making.
Nissan Threat of Substitute Products or Services
- Environment Friendly Practices: Any major development in climate conditions or environment friendly practices will substitute the customer life style patterns and usage of vehicles will be replaced by two wheelers.
- Natural Calamities, Marco Economic Conditions , Post-COVID 19 Market: Any natural calamity, changes in macro-economic conditions like current recession and post COVID slow recovery markets poses alternates travelling options may act as product substitution.
References
- Forbes, Profile,Nissan
- Fortune 500 Profile Nissan
- Nissan (January 5,2012) Welcome to the world of Nissan
- Statista (July 19, 2022) Nissan’s net sales from FY 2008 to FY 2021 (in Japanese yen)| Statista. Statista.Availableat.Statista
- Nissan, Electrify the world,Official Global Newsroom
- Nissan Motor Corporation, Evolving Supplier Quality
- Statista (Oct 7,2022)Consumer satisfaction with Nissan in the United States from 2006 to 2021 (index score).Available at Statista.
- Statista (June 16,2022) Most valuable brands within the automotive sector worldwide as of 2022,by brand value .Available at Statista
- Toyota News Room,(May 12,2021) TMC Announces Financial Results For Fiscal Year Ended March 31,2021 .Available at Toyota News Room
- Mercedes-Benz Group Full Year Results and Annual Report 2021.Available at Mercedes-Benz Group
- The Conversation (December 10,2022) Why Nissan is probably the most serious threat to Tesla out of the traditional automakers. Available at