Nissan and The Art of The Small Car

Yesterday's Wall Street Journal featured an article concerning GM's IT chief, Ralph Szygenda. As he detailed his accomplishments in reducing GM's tech expenditures, he mused, in summary,


"the IT department can't save an automotive company, but it can accelerate the efforts. This is a fashion business. The best processes in the world don't matter if you don't have the best cars."


Just so. And to see how far GM has to go, one need look no further than the Journal's story on Nissan, which appeared last week, on Monday, October 22nd. The piece depicts the incredible focus of CarlosGhosn's engineer, Carlos Taveras, on designing and manufacturing superior entry-level, small cars. The Journal pieces notes,


"In 1998 Mr. Ghosn, then Renault's head of manufacturing and engineering, put Mr. Tavares in charge of Renault's most crucial line of compact cars, the Mégane and Scénic series. ... The engineer had demonstrated his small-car savvy while working on Renault's tiny Clio II subcompact and other models. Under his leadership, the Mégane and Scénic got sportier, aerodynamic grills and curvier trunks, and became Renault's most popular line, accounting for more than a third of the company's auto revenues in 2002. In 2004, Mr. Ghosn sent Mr. Tavares to work on midsize cars at Nissan, where he soon became an executive vice president and a member of the board of directors.

This past April, he effectively became Mr. Ghosn's No. 2 in Tokyo -- just after the company reported its profit decline. Mr. Tavares concluded that Nissan should focus a lot more on emerging markets to boost stagnating world-wide sales. But competition was already heating up."


What this article showed me is how challenging it is, and to what lengths Nissan and Mr. Ghosn will go, to engineer a profitable, attractive small car for the emerging drivers of Africa, Asia and the India subcontinent. For instance,


"On a visit to a factory in Thailand last year, Mr. Tavares noticed that the complex shape of the Tiida's door panels meant that half as many Tiida doors as Logan doors could be stacked in a shipping container. His product planners said the higher-priced Tiida needs more complex doors than the Logan, he recounted, but "I told them, 'Let's be serious,'" Mr. Tavares says. He told them to start "making sure, when you design a part, that they can be piled together."

Finding cost cuts on the Tiida has helped product planners apply the change in thinking to new models, he says; they are focusing on details such as how much a certain kind of speedometer or door handle will add to production costs. Japanese auto makers also have been in a heated race to build the roomiest small cars, and Nissan engineers are working on ways to comfortably fit luggage and five passengers without making the car bigger and heavier overall."


Tavares' intensity and attention to detail seems to outstrip anything I've read about his counterparts at GM or Ford. But Tavares isn't just a production-oriented engineer. No, he's far more potent- he has an understanding of the use of engineering for marketing, as illustrated in this passage from the article,


"Nissan also is moving production to low-cost areas and using more local suppliers in place of longtime Japanese suppliers. This year at its Thailand plant, Nissan cut its parts imported from Japan from an already-low 30% to 10%. It also is soliciting more local staff and input instead of relying on designers and engineers in Japan: Nissan and Renault plan a joint business center in Chennai, India, in early 2008. Mr. Tavares says he hopes local input will help designers cut costs and generate sales by offering only features consumers want in each country."


Reading this article reminded me of something in a Journal article about Alan Mulally's early experiences at Ford. He had described how he brought Boeing engineers in to explain the engineering of a Boeing plane. Further, Mulally provided examples from the various Fords he drove, as CEO, showing how small, seemingly-insignificant parts, like windshield wipers, differed from car to car. Tavares is like Mulally on steroids. Plus, he's already integrated into his firm.


Whereas Mulally is trying to teach Ford engineers as an outsider, Tavares is firmly linked to Nissan's CEO, and has years among the constituent companies of the alliance.


I wouldn't even know where to begin to imagine how far behind these two firms is GM. As the opening quote from the company's IT czar illustrated, he only feels he can facilitate a turnaround- someone else will have to actually pull it off by designing better cars.


What this article about Nissan, and Mr. Tavares, demonstrated to me is just how hard it will be for auto makers to make money on the smaller cars they are counting on to comprise the growth in the sector for the next decade. And how small a chance I'd give to GM, Ford and Chrysler at pulling off such intense, integrated design, development, engineering and marketing for small cars sold offshore.