Trail Production from the UK to Japan

Introduction

Nissan Motor Co., Ltd, established in 1993, manufactures automobiles in 20 markets, which are located globally. The company currently has more than 160 markets. Nissan has an international strategy of relocating its production of its model of Nissan X-Trail from the UK to Japan. One of the primary motivations for this international strategy is due to the unconducive political and economic climate set forth by the Brexit, which brings about uncertainty about UK’s future relationship with the European Union (EU) (Jones & Sabbagh, 2019). Also contributing to the relocation of the manufacture of the X-Trail is the decline in vehicle production in the UK by 9.1% in 2018. An advantage to this relocation is that, while the X-trail will be manufactured in Japan, it will be imported to the EU at 0% tariff (Reid, 2019).

External Analysis of Host Nation

vThe UK, the current host nation for the intended manufacture of Nissan’s X-trail before relocation, has a vehicle industry, which is on the struggle. To couple the declining demand, there is a decline in demand for vehicles from the UK. This is due to the decline in demand for vehicles in China, which is the world’s largest market. In addition, there are growing environmental concerns over harmful emissions into the earth’s atmosphere, which poses a significant amount of stress on automotive companies (Thomas, 2019).

Competitive Landscape

In Japan, Nissan’s X-Trail will be competing with models from other automotive manufacturers such as Toyota, Suzuki, and Isuzu. Toyota, for example, is the brand leader in the nation, having grown by 4.2% by June 2019, and having a market share of 29.9% in Japan. Isuzu has also been experiencing consistency in growth of 25.6% by June 2019. Therefore, in the international strategy of relocation, Nissan ought to consider adopting aggressive strategies of market entry and penetration in Japan. Nissan will acquire significant growth because the Japanese automotive industry is mature, such that, in 2014, the total sales ranged from 5.0 million to 5.5 million units (Focus2move, 2019). In 2019, the market recorded an increase in sales of 6.6% and 0.7% in May and Junes respectively.

SWOT Analysis of Japan

S1: With respect to public administration and policy-making, the Japanese government takes pride in making clear and strong decisions, which result in its developing economy.

S2: Japan has a workforce, which is well skilled and consistently delivers high-quality products, and this is evident in the marketability of vehicles from its automotive industry.

W: Japan is among the tops three nations ranking in the World Debt. In 2013, statistics show that the debt exceeded twice the national GDP.

O: As Japan experiences economic growth, e-commerce is a growing platform for new-age entrepreneurs seeking to explore niches in Japan.

T: Japan has a high taxation rate, which means that companies experience high tax cuts on their revenue. This is a threat to development and new businesses because products will be costly, and this reduces the number of sales in the market.

Nissan Organization Resources

Nissan made an alliance with Renault in 1999, thus extending its automotive production resources. This alliance gives the company the opportunity to engage in research and development activities, which are costly without experiencing much pressure (Ewing, et al., 2019). Also, synergy from both companies allows Nissan to engage in global projects, negotiate lucrative contracts, and enter new markets.

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Recommendations and Conclusion

Nissan’s international strategy to relocate its production of the X-Trail from the UK to Japan will be beneficial to the company. This is because, even though there is competition from other firms such as Toyota and Isuzu, Nissan will be backed with its alliance with Renault, and it can still be imported to the EU markets at 0% tariff.

Unlike the UK, where the Brexit destabilizes the political arena and the economy, Japan has strong and clear policies, which drive growth in its markets. Even though Japan has a high taxation rate, the number of sales will be higher in the Japanese market, compared to the car demand in the UK market. Thus, the revenues from high number of sales will offset the loss made due to high corporate taxes.

Therefore, Nissan X-Trail should proceed with its international strategy to relocate production in Japan.

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References

Ewing, J., Alderman, L. & Dooley, B., 2019. Renault and Nissan Need Each Other to Thrive in Future, 2 Leaders Say. [Online]

Focus2move, 2019. Japan June. Isuzu is in very good shape, while Toyota Holds 29.9% of share. [Online]

Reid, C., 2019. Brexit Blamed For Nissan Pulling Manufacture Of X-Trail From U.K.. [Online] Available at:

Thomas, D., 2019. Five reasons the car industry is struggling. [Online]