Company Spotlight MarketWatch: Automotive

Company Spotlight: Nissan

Japanese auto major Nissan Motor is planning to source auto parts worth approximately $40 million
from India by 2012, reported the Press Trust of India.

In 2010, the automaker aims to source auto parts worth $20 million from India, with plans to subsequently
increase this to $30 million by 2011 and $40 million the following year.

Nissan intends to use its manufacturing plant in Chennai for the supply of auto parts from India to the
company's worldwide operations in Thailand, China and Japan.

According to the news source, the company is likely to begin the commercial production of its compact car at
the Chennai facility, where Nissan, along with its alliance partner Renault, had invested INR45 billion.

Kiminobu Tokuyama, managing director and CEO of Nissan Motor India, as quoted by the Press Trust of
India, said: "The compact car will be based on V-platform and we expect three models from that platform. The
first one would be a hatchback, the second model would be a sedan and the third option is being evaluated
currently."

Business Description

Nissan Motor and its consolidated subsidiaries are primarily engaged in the manufacture and sale of
automobile products. The group also provides financial services. Nissan operates in Japan, the US, Canada,
Mexico, Australia, New Zealand, South Africa, the Middle East and Asia.

The group partners with Renault for automobile manufacturing and sales and automotive financing. Renault
holds a 44.3% stake in Nissan, while Nissan owns 15% of Renault shares. The alliance jointly operates
Renault Nissan, in which both Nissan and Renault have a 50% interest. The Renault Nissan manages the
operations of Renault-Nissan Purchasing Organization (RNPO) and Renault-Nissan Information Services
(RNIS).

The group divides its operations into two reportable segments: automobile and sales financing.

Nissan's automobile segment is engaged in the manufacturing and sale of passenger cars, trucks, sports
utility vehicles (SUVs), light utility vehicles and mini vans. The group markets its passenger cars under the
Nissan, Infiniti and Forklift brand names. Some of the important models of the Nissan brand include Otti,
Moco, Pino, Cube, Platina, Note, Versa, Livina, Aprio, Bluebird, Wingroad, Sentra, Altima, Maxima, Cima,
Tenna, Skyline, X-trail, Patrol, Pathfinder, Armada, Xterra, Rogue, Murano, Quest, Elgrand, Livina, Serena,
Clipper, Frontier, Titan, Expert, Venette, Civilian, Altas, Interstar, Primaster and Teana. In FY2008, the group
recorded total sales of 3,675,574 units, an increase of 5.7% over 2006.

The group's sales financing segment provides financial products and services such as auto loans, car leasing,
credit cards, car rental and car insurance through its wholly owned subsidiary Nissan Financial Services
(NFS). These financial services are provided primarily in Japan and North America. NFS has a wholly owned
consolidated subsidiary called Nissan Plazasol, which intermediates the sale of used cars. Another
subsidiary, Nissan Rent-A-Car Shizuoka, is engaged in car rentals.

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Company Spotlight MarketWatch: Automotive

Key facts Major products & services

Address 1-1 Products
Takashima 1-chome Cars
Nishi-ku Trucks
Yokohama-shi SUVs
Kanagawa
220-8686
Japan Financial services
Website www.nissan-global.com Auto loans
Telephone +81-45-523-5523 Car leasing
Tokyo ticker 7201 Credit cards
NASDAQ ticker NSANY Car rental
Turnover (JPYm) 10,824,238 Car insurance
Employees 180,500
Financial year end December

SWOT Analysis

Table: SWOT Analysis

Strengths Weaknesses

Global operations Weak operating performance

Strategic alliance with Renault Low employee productivity

Research and development activities

Opportunities Threats

Product launches Competition in the global automotive market

Growing opportunities in emerging Tightening emission standards

markets

Source: Datamonitor

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Company Spotlight MarketWatch: Automotive

Strengths

Global operations

The group has a wide geographic base. It has operations across Japan, North America, Europe and other
regions. In addition, it is well diversified in terms of revenue generation from these regions. For instance, in
FY2008, the group generated 23.2% of its total revenues from Japan, 40.8% from North America, 19.9% from
Europe, and 16.1% from other regions. These global operations not only provide protection against
unfavorable forces in specific market but also enable the group to benefit from opportunities available in
various markets.

Strategic alliance with Renault

The group maintains a strategic relationship with Renault. As of the end of FY2008, Renault held a 44.3%
stake in Nissan, while Nissan owns 15% of Renault's shares. The alliance is engaged in automobile
manufacturing and sales, as well as automotive financing. In FY2008, the combined sales of Nissan and
Renault totaled 6,160,046 vehicles (3,675,574 for Nissan, and 2,484,472 for Renault). This gave the alliance
a combined market share of 9.1%, placing it fourth among the major automobile groups across the world. The
alliance jointly operates Renault Nissan, in which both Nissan and Renault have a 50% interest. It also
operates RNPO and RNIS. Both the companies share platforms, technologies and best practices.

Furthermore, the alliance has taken a number of strategic initiatives in order to fuel its performance. In May
2008, Renault and Nissan announced that they had formed a partnership with the Indian auto manufacturer
Bajaj Motors that will develop and market an ultra-low-cost car from 2011. The alliance has also agreed to
mass-market electric vehicles, and has already signed agreements with nations and states such as Israel,
Denmark, Portugal and Tennessee in the US. Both companies in the alliance will continue to grow through
innovative collaboration, leveraging the expertise of their successful partnership for mutual progress and
profit.

Research and development activities

Nissan Motor has strong R&D capabilities, and devotes large quantities of funding to this end. For instance,
the total R&D costs of the group stood at JPY457,482 million (approximately $4,019.8 million) in FY2008,
representing 4.2% of its total revenues.

The firm's R&D activities focus on the environment, vehicle safety, information technology and product
development. In the recent years, the group has designed innovative products across categories such as
electric vehicles and fuel cell hybrid technologies. For instance, in April 2008 the group displayed its Pivo-its
electric concept (used to discover new vehicle fuels, including electricity, hydrogen and biofuels made from
plants) and a compact laminated lithium-ion battery for electric vehicles at the "The Science of Survival"
exhibition in London. Strong R&D capabilities enable the group to build a broad range of vehicle portfolio and
improve its competitive strength in the automotive industry.

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Company Spotlight MarketWatch: Automotive

Weaknesses

Weak operating performance

Nissan Motor recorded a weak financial performance in the 2006-08 period. During this period, the revenues
of the group increased at a CAGR of 7.5%, to reach JPY10,824,238 million (approximately $95,036.8 million)
in FY2008. Although the firm's revenues increased at a moderate rate, its profitability position declined
significantly. The group's operating profit declined from JPY871,841 million (approximately $7,654.8 million) in
2006 to JPY790,830 million (approximately $6,943.4 million) in 2008. The net profit of the company also
declined to JPY482,261 million (approximately $4,234.3 million) in 2008 from JPY518,050 million
(approximately $4,548.5 million) in 2006.

The profit margins of the group likewise fell significantly, from 9.3% in 2006 to 7.3% in 2008. Similarly, the net
profit of the firm dropped from 5.6% in 2006 to 4.5% in 2008. This weak operating performance may affect
Nissan's long-term growth plans.

Low employee productivity

Nissan Motor posted weak revenues in proportion to the total number of its employees. In FY2008, the group
recorded total revenues of JPY10,824,238 million (approximately $95,036.8 million) with a total of 180,535
employees. The revenue per employee of the group stood at JPY60 million (approximately $0.53 million)
significantly lower when compared to those of its competitors such as Toyota, Honda and Mitsubishi.

For instance, the revenue per employee of Toyota stood at JPY83.2 million (approximately $0.73 million) for
the financial year ended March 2008, significantly higher than the revenue per employee of Nissan. The
revenue per employee of Mitsubishi, another competitor, stood at JPY80.8 million (approximately $0.71
million) in FY2008. Similarly, the revenue per employee of Honda stood at JPY67.1 million (approximately
$0.59 million). The weak revenue per employee of the group compared to its competitors indicates its weaker
productivity and operational inefficiency.

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Company Spotlight MarketWatch: Automotive

Opportunities

Product launches

Nissan Motor has launched a number of products across various markets. For instance, in February 2008 it
launched the new Teana premium sedan (the Infiniti EX luxury sport crossover) at the 2008 Beijing
International Automotive Exhibition. The following month, it announced the sales launch of the fully
redesigned Teana luxury sedan at dealers across Japan. In September that year, Nissan launched the all-
new, second-generation Nissan Murano crossover sport utility vehicle (SUV) in Japan. The month after that,
Nissan Motor launched the X-TRAIL, a passenger vehicle, in China as part of its partnership with Dongfeng
Motor. Product launches such as these will increase the group's reach and the market share which in turn
should boost its revenues and profitability.

Growing opportunities in emerging markets

The group is increasing its focus on emerging markets such as Russia, China and India. These markets are
expected to witness strong growth in the coming years. In India, Renault and Nissan signed a memorandum
of understanding (MoU) with government of Tamil Nadu, India for their proposed industrial automotive facility
in Chennai with an installed capacity of 400,000 vehicles per year. Furthermore, in September 2008, Nissan
and Ashok Leyland signed a MoU with the government of Tamil Nadu to acquire 380 acres for their joint
venture companies engaged in vehicle manufacturing, powertrain manufacturing and technology
development. The firm's increased focus on these emerging markets will improve its business operations and
its market share.

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Company Spotlight MarketWatch: Automotive

Threats

Competition in the global automotive market

The worldwide automotive market is highly competitive. Nissan Motor faces strong competition from
automotive manufacturers such as Toyota Motor, Honda Motor, Suzuki, General Motor and Ford. The
competition among various auto players is likely to intensify in light of continuing globalization and
consolidation in the worldwide automotive industry. The factors affecting competition include product quality
and features, the amount of time required for innovation and development, pricing, reliability, safety, fuel
economy, customer service and financing terms. Increased competition may lead to lower vehicle unit sales
and increased inventories, which may result in a further downward price pressure and adversely affect the
group's financial condition and results of operations.

Tightening emission standards

The European Commission and the EU Parliament have adopted a directive that establishes increasingly
stringent emission standards for passenger and light commercial vehicles for model years 2005 and
thereafter (EURO 4). Under the directive, manufacturers will be responsible for the emission performance of
these vehicles for five years or 100,000km, whichever is shorter. A more stringent emission standard (EURO
5) became effective in 2009. The EU Commission intends to define even more severe emission standards
(EURO 6), which, if adopted, would become mandatory around 2014 or 2015.

In Japan, the Ministry of Environment in Japan finalized very stringent heavy-duty emission standards in
2005. In addition, several Asian countries have adopted regulations similar to Euro3 and Euro4. The emission
standards adopted across various regions may result in additional costs for the product development, testing
and manufacturing operations of Nissan.

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