It is a pleasure to be with you today at an important time in the life of the United States of America and of the global car industry.
* The recent election was an important event that citizens of the world – not just Americans – have been watching with great interest.
* The decisions and actions your new President elect and his new administration will take will have a powerful influence that affects economies and societies around the globe.
Yesterday I spent the day with 100 CEOs who were gathered in Washington, D.C., to talk about the most pressing policy issues the new President and the new Congress will face.
* For me, it was a very interesting opportunity to spend time with other corporate chiefs from different industries and institutions – talking about priorities, solutions, threats… about how things are and how they could be.
* We talked about things that are on everyone’s mind today – such as finance and the U.S. economy… energy and the environment… health care… and America in the global economy.
* It was a good time for both reflection and forward-thinking ideas – at a time when the United States and most of the rest of the world is in a very serious and worrying situation.
* Credit flow are far from normal, and the recession that began in the U.S. is now not only deepening but spreading across the globe. Even skeptics are admitting it is going to hit everyone.
* It’s fair to say that no one could have predicted how the global economy would evolve in 2008.
* This extreme level of volatility and turmoil has not been experienced in decades – perhaps since 1929 – putting many of the usual rules of business up in the air. We will have no book to follow, and we will need to be lucid and innovative in order to get out of the slump.
And the turmoil is having a profound impact on our industry not only in the U.S. but globally.
October was the worst month for U.S. auto sales in 25 years.
* Last year the TIV in the United States was a little more than 16 million.
* Last month’s rate plunged to an annualized rate of 10.6 million.
* The world’s biggest auto market is down 35% – to a level that has not been seen for a very long time.
* The decline is not confined to this market; most of the mature auto markets are down significantly, with slowdowns in the emerging markets as well.
We are clearly in uncharted territory.
Now that there is no more denial and there is recognition of the situation, where do we go from now?
It’s a legitimate question.
And for every company in this room, there is a different answer.
* All companies are paying attention to short-term objectives.
* That is making sure you maintain your company is generating a positive free cash flow and avoid burning cash.
* Optimizing profit as much as you can in a recessive market, at the same time maintain minimum level of investments, make sure inventory and accounts receivables are under control.
* There is always a moment where the storm is over and growth resumes and when this happens, you want to be a good contributor and good competitor which means you need to keep an eye on the long-term.
* Everyone is hoping that pent-up demand is building and consumers will soon start buying again, but we really don’t know when that will happen. We have to in the meantime, adapt in function of these threatening circumstances, balance short- and long-term objectives in order to maintain viability and a future.
History has shown that in times of financial crisis, the likelihood for industry consolidations increases.
* I’m not just talking about the auto industry, but for any industry.
Taking this new technology to mass production will require building up the infrastructure required for its use and securing the economic conditions for success.
That is our vision and we are working aggressively to make it happen.
We have a holistic view of sustainable mobility.
We see the interdependence of the automakers… the government… and third parties in building a greener transportation system.
Introducing a zero-emission lineup is good, but it is one piece of a larger puzzle.
People want to know: “Where will I charge my EV?” “Where can I find charging stations when I am away from home?” “Is there any tax break available to make it more affordable?” “What is going to happen in the aftermarket?”
To ensure the adaption of more eco-friendly cars… to provide a good alternative for crowded city driving… to build an infrastructure that gives consumers sufficient autonomy – we need to think and develop in terms of a big-picture for the future of mobility.
The good news is, based on the conversations we have been having over the past six months, our vision is one that is shared.
Ever since we announced the Alliance’s electric vehicle plans, we have been receiving calls – not just from consumers, but from presidents, prime ministers, governors, mayors, and companies.
When we talk about bringing an automotive solution that will totally eliminate vehicle pollutants and curb dependence on oil, their immediate response is, “What can we do? What do you need from us – organization? Incentives? Infrastructure?”
Government leaders are extremely interested in the value of this prospect.
* The environmental value.
* The social and political value.
* The economic value.
* We have already seen this happening in the commercial banking and airline industries, and we have no reason to think our own industry will be an exception.
* If this crisis continues and deepens, we may soon see fewer actors as well as actors seriously weakened by their struggles.
Many efforts are being taken to protect the industry’s future, but there are other uncharted territories before us – relating to the products themselves.
At the end of the day what makes us attractive is what kind of technology we are providing and what kind of cars we are putting in the markets.
The one thing that is certain about the future is that people will continue to be driving cars.
* Cars have absolutely no substitute yet. Five, ten, fifteen years down the road, people will continue to be driving cars.
* They cannot be replaced by public transportation because people need and want their autonomy.
* We see it all the time in emerging markets, where buying a car is still a major life event and owning a car is an important symbol of freedom, status, and personal achievement.
* As soon as people gain purchasing power, the first thing they want to do is buy a car.
* Cars will continue to be with us in the long and in the future.
But what kind of cars will they be? Diesels? Flex fuels? Hybrids? Fuel cells? Electric?
This is the question and it is a question of growing importance because of the way the world is rapidly changing.
* The truth is, it’s likely that all these vehicle types will continue to be demanded for some time to come.
* It’s not our job to push technologies – customers will decide. And it may be different in function of the region.
* For example, diesels today represent more than sixty percent, while it is zero in the U.S. and in Japan. You will have different technologies dominating in one region and inexistent in other regions.
But two particular trends are bringing this conversation to the forefront.
The first trend is the shift in demographics.
Today the world is populated by 6.7 billion humans.
By 2050, the world’s population is expected to reach over 9 billion.
Today, there are 600 million vehicles worldwide rolling on the planet.
By 2050, statistics show there maybe up to 2.5 billion vehicles.
And where will the growth occur?
Many of those vehicles will be sold to the rising middle classes all over the world – particularly in markets such as China and India, where, today, there are fewer than 50 vehicles per 1,000 inhabitants compared to 800 vehicles per 1,000 in the United States.
With such rapid population growth in developing markets, it’s no wonder that consumers and governments alike are becoming concerned about the “crowding effect” and the potential for congestion, pollution and scarce resources.
In fact, the World Wildlife Fund has pointed out that if China catches up to U.S. standards of consumption, it will require two planets to sustain our livelihood for the long run.
And if the rest of the world catches up, it will require eleven.
Thinking about our planet’s ability to sustain 2.5 billion oil-fueled cars 40 years from now leads us to the second key trend – the concern over the environment.
I do not need to cite the statistics on global warming and the need to curb greenhouse gas emissions because we all know the reality.
For consumers, there’s very little debate about whether global warming is real.
A recent Energy Pulse survey noted that 63.4% of Americans say they are “very concerned about climate change [and] global warming.”
So concern about the environment is widespread – and especially among the younger generation.
And, unlike the financial crisis, which hopefully will come to an end in a foreseeable future, concern about the environment will not end soon.
Once this financial crisis is over, the factors that drove oil prices up this summer will likely drive oil prices up again… and the focus on fuel emissions will continue.
So we have a convergence on the issue… but a divergence on solutions to the issue.
As automakers, we answer with a range of technologies – from hybrids to clean diesels to fuel cell vehicles.
But a 20% to 30% improvement in emissions is not going to solve it. It is not the end game.
The end game is zero emissions – and the best way to curb emissions is not to produce them at all.
This is why Nissan, partnering with Renault, named zero-emission leadership as one of our three key commitments in our current five-year business plan, NISSAN GT 2012.
* We will launch our first pure-electric car in 2010 in the United States and Japan.
* We will begin to mass-market electric cars worldwide in 2012.
Nissan has been working on the development of lithium-ion batteries – the most important part of the electric car – since 1992.
* We own our battery company, a joint venture we started with NEC earlier this year, which gives us better control on the quality and cost.