Tokyo - General Motors unveiled the YGM-1 concept vehicle that will serve as the base for the company's first-ever passenger vehicle to be manufactured in Asia for the Asian market.

Developed in conjunction with its strategic partner Suzuki, the YGM-1 represents a significant milestone for GM's continued drive to capture the Asia Pacific market and for the 18-year-old GM/Suzuki strategic alliance. "At GM, our goal is to develop a high-quality Asian-based core product portfolio. The Chevrolet YGM-1 is an example of how we are working closely with our strategic partners to develop such a portfolio. We want to ensure that consumers in Asia and beyond have access to a wider range of more advanced vehicles more immediately and at a lower cost," said Rudolph A. Schlais Jr., GM Group Vice President and President of General Motors Asia Pacific.

The YGM-1 is based on Suzuki's new small car platform, GM's sophisticated design engineering and Chevrolet. s strong brand characteristics. The YGM-1 will offer consumers in Asia a small vehicle that brings fun and excitement with lifestyle vehicle styling and value for money. With its attractive design, spacious interior and 4X4 capability, the YGM-1 targets individuals who aspire to an active lifestyle. Plans call for the production model version of the YGM-1 to be manufactured in Asia with a start of production in 2001.

Over the next 10 years, Asia will become the world's second largest automotive market with sales approaching 20 million vehicles per year. One of GM's strategies is to develop strong alliances with Asia Pacific based companies in order to produce the next generation of vehicles. This Suzuki small car platform is very flexible and will have applications around the world for General Motors and Suzuki. Future vehicle derivatives of the YGM-1 in turn may be possible. "We are currently exploring various different body styles including sedan, van, 4x4 wagon and pick-up designs," Mr. Schlais said.

Over the years, GM and Suzuki have combined efforts in global manufacturing and product development. Key initiatives include the following:
- the supply of powertrains and components for small cars for GM in South America;
- the establishment of the joint-venture manufacturing company, CAMI Automotive Inc., in 1986 in Canada;
- the joint development of a small car for the European markets with production from GM's plant in Poland and Suzuki's plant in Hungary;
- the future production of the Grand Vitara model at GM's Industrial Complex in Rosario, Argentina.

Established in 1915, General Motors Asia Pacific today has more than 10,000 employees, seven manufacturing and assembly facilities and sales operations spanning 14 countries. The company offers more than 20 vehicles in the region. In the past four years alone, GM has invested more than US$3 billion in the region.

"While cost cutting will be the most dramatic and visible part of the plan, we cannot save our way to success," said Carlos Ghosn, Nissan's chief operating officer, emphasizing the importance of product development and sales growth.

Carlos Ghosn

Photo: Nissan

"The combination of growth and cost reduction will allow Nissan to achieve a consolidated operating profit of 4.5 percent of sales by FY2002," said Ghosn, noting that the first goal of the Revival Plan is to return Nissan to profitability for FY2000. The 1 trillion Yen cost reduction will be achieved in three major areas: global purchasing; manufacturing; and sales, general and administrative costs.

Three assembly plants in Japan will be closed by March 2001 and two powertrain operations will be closed by March 2002. Worldwide headcount will be reduced by 21,000 and key functions will be globalized. A 200 billion Yen provision will be made in the current fiscal year to absorb the costs of the restructuring program. Reducing purchasing costs is a key component of the Plan's overall success. Purchasing policy will be centralized and executed globally in contrast to the current regional/country-by-country basis. Purchasing costs, which represent 60 percent of the company's total costs, will be reduced by 20 percent over three years and the number of parts and materials suppliers will be 600 by 2002 compared with 1145 groups currently. The significantly increased economies of scales for parts and materials will benefit Nissan's "partnership suppliers" and deliver substantial cost savings for the company.

A significant part of the overall cost savings will come from how Nissan works with its suppliers. Under a program called "3,3,3"* Nissan purchasing and engineering will work more closely with suppliers, sharing worldwide best practice and performance in technology, quality, cost and delivery. Nissan will challenge its own specifications and standards while protecting its established reputation for quality and reliability. The Revival Plan outlines the company's target for achieving manufacturing efficiency and global cost competitiveness. Nissan's manufacturing plants, including in Japan, achieve world class productivity, however the company has become burdened by excess production capacity and high fixed costs. Nissan will reduce capacity in Japan and simplify its production scheme to further develop a lean and flexible manufacturing base. Consequently, Nissan will implement the following plant closures: car assembly plants: Murayama, Shatai Kyoto and Aichi Kikai Minato; powertrain operations: Kurihama Plant and Kyushu Engine Shop.

In Japan, current production of 1.28 million units annually represents 53 percent capacity utilization. Under the Revival Plan, capacity in Japan will be reduced by 30 percent to 1.65 million vehicles, raising the utilization rate to 82 percent by FY 2002. "The plant closures, however painful, will guarantee the future of the remaining plants by allowing them to be industry leaders, both in terms of productivity and cost effectiveness," Ghosn said, adding Nissan will take advantage of the reduction in the number of platforms to further simplify the manufacturing scheme. Nissan's current complex manufacturing structure in Japan includes producing 24 platforms at seven assembly plants. Under the new plan, in 2002 Nissan will have 15 platforms divided between four plants and in 2004 will have 12 platforms divided between four plants. Nissan will further reduce costs by rationalizing logistics. Sales, general and administrative costs are to be reduced 20 percent by cutting incentives, rationalizing worldwide advertising and reducing bureaucracy; the company will be changed from the current multi-regional organization into a truly global company. The Japanese dealer organization will be streamlined including closing 10 percent of the retail outlets; in the United States, the regional organization will be streamlined.**

Financial operations worldwide will be centralized to develop global financial controls and risk management. Nissan, which has share holdings in 1,394 companies, will realize assets by selling-off its interests on the basis of a cost/benefit analysis. In addition, Nissan will dispose of land, securities and non-core assets and will adopt an inventory reduction program to decrease by 30 percent its inventory-to-sales level by 2002.

"Our objective is to free resources from non-strategic, non-core assets and invest more in our core business -- cars -- while at the same time significantly reducing our debt," said Ghosn. "The aim is to grow the company, not shrink it." Research and Development will be re-organized to give regions more responsibility for their entire product line while creating a globally integrated organization. While R&D will focus on enhancing core technologies, specific R&D resources will be dedicated to cost reduction activities with suppliers.

Nissan will increasingly rely upon suppliers to reduce development time and costs and will closely integrate suppliers into the design and development process. The company wants to reduce the gap between a model's debut in Japan and its launch in overseas markets. Nissan will look to its Alliance partner Renault to further share research, advanced engineering projects and common platforms; the Clio/Twingo/March/Micra/Cube models will be the first to share a common platform. "All of these actions will allow us to increase our technological strength and boost research and development output, while minimizing the amount of additional resources necessary," said Ghosn. "The objective here is not to merge Renault and Nissan R&D organizations, but to make a precise and swift division of the tasks and projects, avoid duplication and support early adoption of common standards and common suppliers."

Highlighting the growing links between the Alliance partners, the companies will establish in Europe common hubs and common back offices; and in a select number of European countries, common operational entities. In South America, Nissan will increase its presence using the existing Renault organization and infrastructure. Renault Credit International will establish a Mexican sales finance company to support Nissan's sales and profit development.

The 21,000 worldwide headcount reduction will be achieved through natural attrition, an increase in part-time employment, spin-off of non-core businesses, and early retirement. In Japan, a performance-based career advancement program will be established. Worldwide, a performance-oriented compensation system for management will be implemented in 2000. Bonuses and stock options will be incentives to boost Nissan's profitability and growth. An international team of 200 Nissan managers developed the Revival Plan.

In announcing the Revival Plan, Ghosn underlined Nissan's commitment to become globally competitive, achieving growing market share and profits based on a bold brand and desirable products. "This plan shows that not only can Nissan recover and become a strong company again, but, walk tall with Renault as the world's fourth largest car maker," Ghosn said, "We must be bold to be strong again."

Editor's note:

*"3,3,3" program means: 3 partners (suppliers, purchasing and engineering), over 3 years, working in 3 regions( Asia, Americas, Europe/Middle East/Africa)
** Detailed plans to be announced by Nissan North America by 1 December 1999

Financial Year FY refers to the year starting in April of the stated of the year and ending in March of the following year -for instance FY 99 commenced April 1999 and ends March 2000

Exchange rates : 110 Yen = $1.00 - 114.93 Yen = 1 euro - 176.15 Yen = 1 Pound

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