By on November 20, 2017

Nissan Murano production

Carlos Ghosn, CEO of the Nissan-Renault-Mitsubishi Alliance, says automakers are going to have to get comfortable with suppliers doing more of the work as the industry evolves. With in-car technologies progressing more rapidly than ever before, the alliance head says engineers will have to lean on parts providers to take the burden off its own engineers.

Ghosn even said he had recently spoken to supplier who accused him of not listening. “They said we are duplicating [their] work,” the CEO recalled.

“They said, ‘We are developing the same things, and at the end of the day, you’re going to order parts from me, and you’re going to pay twice — for your own development and for mine. So why don’t we start from the beginning to work together?’ That’s an important point,” he said. “We are now probably one of the largest buyers in the world.”

The automotive collective intends to sell more than 14 million vehicles annually by the end of 2022, which represents an increase of about 3.5 million units from the expected volume for 2017. The strategy includes more shared platforms and powertrains between brands, a dozen EV models, and a fleet of autonomous taxis. 

More advanced technologies, like batteries and autonomous hardware, are already heavily dependent upon third-party suppliers. Ghosn doesn’t expect that to change in the years to come.

“We’re in a period where the demand for resources is huge,” he explained in an interview with Automotive News. “There are so many breakthroughs coming. Artificial intelligence, all the components of autonomous drive, connectivity — there are plenty of things coming our way. And then you have your usual business and also the emission regulations, where you have to develop and adapt diesel and gasoline engines, transmissions, electric cars and motors. The workload on an individual company’s engineers is huge.”

“You need to make decisions about, what are the parts you’re going to build yourself, and what are the parts you’re going to delegate to your suppliers?” he said of the industry. “We have to be pragmatic. What’s important is getting the best technology. Nobody has the resources to do everything.”

Ghosn stepped down from his position as Nissan’s CEO in April so he could devote his entire attention to the alliance between Renault, Mitsubishi, and Nissan — with volume being is the name of his game. He claims not to be overly concerned with the intensified role of suppliers are playing in terms of advanced electronics.

“The difficulty of the task right now is that we’re in an era when most of the parts and technologies we need do not exist yet,” Ghosn stated. “Because of the huge amount of new technology coming, the R&D costs are going to go up. We need to converge and have common platforms. And we need to have a much more serious conversation about what work should be done outside the company.”

[Image: Nissan]

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5 Comments on “Ghosn: Suppliers Essential to Nissan’s Future Success...”

  • avatar
    SCE to AUX

    Every mfr – of any product – goes through the same decision process.

    Generally, you want to outsource:

    1. Commodity/generic designs with limited intellectual property value.
    2. Designs for which you have little in-house expertise.
    3. When your development schedule exceeds your time resources.
    4. When you’ve decided not to develop core competency in a certain area.

    All of this can work out very well.

    However, outsourcing can backfire if you don’t fully vet the supplier’s work (GM/Delphi ignition switches), or if you completely cede the product knowledge to them. I’ve seen both, and it isn’t pretty.

  • avatar
    Tele Vision

    Wow. That’s brilliant. Getting tech companies to supply the tech. What’s he going to discover next? JIT scheduling? Flowcharts, even? This reads more like a sop to the investors than a production revelation.

  • avatar

    ” — with volume being is the name of his game.”

    I’m going to have to start outsourcing my typo alerts.

  • avatar

    Trending not so good for traditional auto manufacturers. As they’ll just be left with making bodies once standardized batteries and EV platforms become out-sourced.

  • avatar

    Ghosn is a hypocritical BSer. When he took over Nissan, he destroyed their quality by instituting American-like Renault policies of supplier ball-squeezing, which is why their products now feature French levels of reliability and durability.

    Toyota and Honda work in partnership with their suppliers, and acknowledge they need to make money to survive. It’s why the suppliers have said outright in independent surveys that if they’re providing the same part to multiple automakers, they’ll give those makers better parts.

    I’d imagine Nissan suppliers who hear this quote are thinking, “So you want me to forgo my profit on your parts, AND develop them for you?” Right.

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