Million vehicles recalled, sales fell sharply, how does Nissan solve China's "troubles"?

Due to the poor sealing of the engine exhaust gas recirculation valve (EGR valve), Dongfeng Nissan has carried out a large-scale recall in China.

Recently, the State Administration for Market Regulation issued an announcement showing that Dongfeng Motor Co., Ltd. filed a recall plan with the State Administration for Market Regulation in accordance with the requirements of the Administrative Regulations on the Recall of Defective Automobile Products, the Implementation Measures of the Administrative Regulations on the Recall of Defective Automobile Products, and the Administrative Regulations on the Recall of Motor Vehicle Emissions, and recalled some Dongfeng Nissan brand Qi Jun, New Qashqai and seventh-generation Tianea Automobile produced from July 23, 2018 to September 26, 2021 from December 30 this year, totaling more than 1.188 million vehicles.

Although the recall is the responsible performance of the manufacturer, such a large-scale number of recalls, as well as the cause of the recall, will have a greater impact on Dongfeng Nissan.

The recall cost is nearly one billion yuan

It is understood that the reason for the recall is that the vehicle EGR valve is not tightly sealed, and the internal bearings may be corroded by chlorine-containing condensate, resulting in the valve body being stuck, poor engine operation, fault lights on, CO, NOX and other pollutant emissions increase, and there are unreasonable emissions. In extreme cases, low-speed flameout power may be interrupted, which is a potential safety hazard.

However, before this recall, a large number of car owners had complained about the failure of the Dongfeng Nissan EGR control valve, resulting in the problem that the vehicle could not be started, which also aroused the attention of all sectors of society at that time. In response to the problem, Dongfeng Nissan said that "it has begun to investigate and deal with it as soon as possible, and after investigation by the technical department, it has been confirmed that the problem is an occasional fault and does not have commonality."

The reason for the recall, according to the content of the announcement, was that under the condition that the State Administration for Market Regulation initiated the defect investigation, Dongfeng Motor Co., Ltd. decided to replace the improved EGR valve for the vehicles covered by the recall free of charge to eliminate hidden dangers.

In this regard, there is also a view that Dongfeng Nissan did not initiate the recall at the first time, perhaps related to the cost. At present, on the shopping platform, a new domestic EGR valve suitable for Qi Jun, Qashqai and Ethereal ranges from 100 yuan to 1,000 yuan, and the lowest is more than 600 yuan.

If the lowest price is calculated, the recall of more than 1.18 million vehicles, the cost of Dongfeng Motor Co., Ltd. may be nearly one billion yuan. And this nearly one billion yuan is a big expense for Dongfeng Nissan and even the entire Dongfeng Group.

Nissan has a lot of "troubles"

According to the financial report released by Dongfeng Group, in the first half of this year, the group's net profit attributable to shareholders of listed companies was 1.27 billion yuan, down 76.9% year-on-year, and the net profit margin was 2.8%, down 9.6 percentage points from the same period last year.

Among them, the profit and loss of Dongfeng Group's joint ventures during the reporting period were 1.403 billion yuan, a decrease of 3.822 billion yuan over the same period. Dongfeng Nissan's joint venture, Dongfeng Motor Co., Ltd., which replaced Dongfeng Nissan's EGR valve free of charge, decreased by CNY 1.76 billion from the same period last year.

Behind the decrease in profits is Dongfeng Nissan's declining market share in recent years. According to public data, Dongfeng Nissan (including Nissan, Venucia and Infiniti brands) sold 1.0671 million units last year, down 14.04% year-on-year; In August this year, Dongfeng Nissan's sales were 61,967 units, down 29.69% year-on-year. In the first eight months of this year, Nissan's cumulative sales of terminal vehicles in China were 482,921 units, down 31.87% year-on-year.

In order to save the decline in sales, in addition to the conventional terminal discounts, Dongfeng Nissan's new cars that have just been launched recently have also adopted the strategy of "incremental price reduction". For example, Jinke, which was listed some time ago, the new car is consistent with the old model in terms of interior and exterior design, and the configuration is increased, the price is reduced by up to 34,000 yuan compared with the old model.

The "play" of incremental price reduction, coupled with this large-scale recall, is bound to affect Nissan's revenue and profit in China. What's more, Dongfeng Nissan also has to face the impact of new energy vehicles, and under multiple pressures, Dongfeng Nissan's electrification and intelligent transformation mentality is becoming more and more urgent.

Build another Dongfeng Nissan?

In June this year, Dongfeng Nissan released the "Re-entrepreneurship Plan", trying to challenge the head camp of joint venture new energy in terms of sales volume driven by products, systems and technologies, and open the second growth curve, and build another Dongfeng Nissan by fighting for new energy.

On the one hand, in terms of product lineup, Nissan brand will launch 7 electrified models by 2026, and by 2030, 80% of its product lines will be electrically driven; The Venucia brand launches at least 2 new energy models every year; The Infiniti brand will actively accelerate the electrification product layout and make a difference in the luxury car market.

On the other hand, in terms of technological upgrading, Dongfeng Nissan will continue to maintain and broaden the multi-track technical route, with pure electric, super-hybrid e-POWER, plug-in hybrid, hydrogen fuel, fuel power 5-dimensional parallel, while promoting the upgrade and iteration of intelligent driving, intelligent power, and intelligent interconnection technology.

"The recall of more than one million vehicles has also given Dongfeng Nissan a wake-up call." Some insiders said to the "car talk" that in the current new energy products are becoming more and more involuted, Dongfeng Nissan must not only have product highlights, but also pay attention to maintaining its "technical Nissan" reputation, otherwise it will only give it a breakthrough and increase the difficulty.