Nissan Motor Co Ltd
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Nissan Motor Co Ltd
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Received the handouts? Okay. So it's 4 p.m., so we would like to begin the announcement of the first quarter financial results. Thank you very much.
Thank you for joining this session out of your tight schedule. I am happy to see a lot of you today.
We would like to ask CFO, Karube-san, to provide the results of the financial performance. Mr. Karube, please go ahead.
Yes, ladies and gentlemen, good afternoon. Thank you for joining us for the announcement of Nissan's first quarter earnings for fiscal year 2019. Today, I will outline our global sales performance and first quarter financial results. Following my presentation, CEO, Saikawa, will provide additional details on the business transformation plan that we announced in May.
I will first start with a summary of the first quarter results. In the first quarter, our global sales volume decreased 6% to 1,231,000 units but outperformed the market which declined 6.8%.
Looking across the regions in China, despite the significant decline in market demand, Nissan's sales increased 2.3%.
In other key regions, including the United States, Europe and Japan, the company's sales underperformed in those markets.
Global total industry volume, or TIV, excluding China, declined 4.8%, whereas Nissan's sales decreased 8.8%.
The company's wholesale volume, including China, fell 13.5%, which declined more than the retail sales. This was one of the factors that negatively affected earnings. However, Nissan's dealer inventory levels, excluding China, decreased 68,000 units during the quarter and we are working on further optimization. Dealer inventory levels in China also continued to decline.
In the first quarter, operating profit decreased from JPY 109.1 billion in the prior year to JPY 1.6 billion. Changes in the external environment, including foreign exchange fluctuations, regulatory compliance and product enrichment costs and raw material price hike resulted in the negative impact of JPY 42.3 billion. Given the decline in the company's wholesale volume, excluding China, sales performance had a negative impact of JPY 60.5 billion. JPY 72.4 billion of this impact came from the volume and mix, which was partially offset by lower selling expenses. Purchasing cost reduction efforts did not offset completely the negative impacts from higher R&D expenses, manufacturing costs and other items. As a result, Monozukuri and others had a negative -- net negative impact of JPY 4.7 billion. We expect that our sales and earnings to improve on the second half of the fiscal year while assuming lower profitability in the first quarter. However, the results were slightly below expectations.
Foreign exchange movements, regulatory compliance expenses, product enrichment costs, commodity prices, Monozukuri and others were approximately in line with our estimates. But sales activities were below internal projections.
We continue to concentrate on our business recovery by improving sales and controlling costs in order to achieve the full year operating profit guidance of JPY 230 billion.
For the first quarter of fiscal year 2019, consolidated net revenues was JPY 2.37 trillion. Operating profit totaled JPY 1.6 billion. Net income was JPY 6.4 billion. Free cash flow for the automotive business was a negative JPY 385.5 billion. We ended the period with an automotive net cash position of JPY 1 trillion. This includes the impact from damages in accounting standards which was a negative JPY 82.5 billion.
On a management pro forma basis, which includes the proportionate consolidation of our Chinese joint venture, the key indicators are on the bottom half of the slide. This slide describes our global sales performance for the first 3 months of the fiscal year. TIV decreased in all markets, except Japan. As a result, global TIV fell 6.8% to 22.5 million units.
Nissan sales decreased 6% to 1,231,000 units and our global market share increased 0.1 percentage point to 5.5%.
These are the sales results in the 4 key markets during the 3-month period. In Japan, Nissan's sales decreased 2.6% to 126,000 units. Sales of registered vehicles declined due to an aged lineup and other factors. In contrast, kei car sales grew significantly due to strong demand for the all-new Nissan Dayz, which went on sale in March.
In China, sales of current Nissan models, including Sylphy, Qashqai and X-Trail, as well as the Venucia D60, which was introduced last November, contributed to incremental sales. Nissan sales increased 2.3% to 344,000 units. Given the increase in sales and a declining market, our market share increased 0.7 percentage points to 5.7%.
In the United States, Nissan sales decreased 3.7% to 351,000 units due to an aged portfolio and the company's continued efforts to normalize sales. However, the average transaction price improved year-on-year. This was a result of lower incentives per unit compared to last year after May as well as pricing improvements.
We also reduced and optimized dealer inventory levels through our continued normalization efforts. We expect to recover gradually our profitability from the second half as we introduce new models.
In Europe, we continue to see the impact from requirements for powertrains to comply with environmental regulations. Nissan sales decreased 16.3% to 135,000 units.
Moving to our financial results. Consolidated net revenues for the 3-month period totaled JPY 2.37 trillion. Operating profit was JPY 1.6 billion, which equates to an operating margin of 0.1%.
Ordinary profit was JPY 35.3 billion. The figure includes JPY 33.1 billion in investment income from companies accounted for under the equity method, including our joint venture in China.
Net income was JPY 6.4 billion, which equates to a net profit margin of 0.3%.
This slide illustrates the operating profit variance analysis in detail.
I will move to the next slide, as I discussed this earlier.
Our projection for full year dividend of JPY 40 per share remains unchanged.
CEO, Saikawa-san, will now present the business transformation program. Saikawa-san, the floor is yours.
Yes, thank you very much, Mr. Karube. Now Mr. Saikawa will present the initiatives that are coming. Mr. Saikawa, the floor is yours.
Yes. Thank you very much. Karube-san presented the results of the first quarter. Following his presentation, I would like to present the actions to be taken from next year onwards. The overview was given to you when we made the announcement of the full year fiscal year '18.
In the latter half of the mid -- ongoing midterm plan, in pursuit of the future growth, we were planning to make investments in the CASE and maintained investments in these future technologies, including CASE, while making selection and concentrations on nonprofitable operations and -- rather than short-term sales push for the short-term benefits, we were -- we are making steady efforts to recover sales in 2 years or 3 years, or even in 2 years as -- if possible and restore the profitability. That was the policy that I announced in May.
And the keys of the business transformation are as follows: U.S. business recovery; an enhancement of the efficiency of the operations and investments, selection and concentration is about -- as consequently reduce the fixed cost; and steady growth through new products, new technologies and Nissan Intelligent Mobility. These were the 3 that I described in May.
We have just ended the first quarter of the year and midterm initiatives are being specified. In July, I said that I would like to make an update once we have the details. That is why in addition to the financial results, let me give you an update. Next page, please.
Yes. This is the entire picture of what we are trying to do. As I said last time, in the ongoing midterm plan, we had a guide of revenue, JPY 16.5 trillion in 2022. That was what we intended to reach. However, this was revised to JPY 14.5 trillion.
As you can see in the diagram, it's JPY 13 trillion at the top. This is where we stand today. And we used to have an objective JPY 16.5 trillion in 2022, but this was revised downward to JPY 14.5 trillion. Operating margin will stand at 6% with this number. That's the goal that we are pursuing as we announced in May.
This means that there is a big change in the direction that we are taking compared to the expansion strategy. We used to intend more than 7 million units, but JPY 14.5 trillion. JPY 14.5 trillion, based on this revenue, the volume will be around 6 million units of production in sales. With the 6 million units, we will produce 6% of operating margin. This is the equation.
In doing so, we are working on reduction of fixed costs and pursuing steady growth. These are the 2 things that we are doing. And in these boxes on the left is a JPY 300 billion on the left. On the right, you see JPY 180 billion. These are the improvements that we make. If we add these 2, it will give us JPY 870 billion which equates to 6% of operating margin.
This JPY 300 billion on the left, this is the fixed cost that is based on the original plans. These are the fixed costs that we have incurred in the past or what will be invested going forward as well as what we have invested now. These fixed costs are here. And we will -- we are going to compress this by JPY 300 billion. That's the first box, JPY 300 billion.
The investments that we have made in the past will be clarified and we will make selection and concentration of investments to be made in the future. With the enhancement of the efficiency, we will produce JPY 300 billion of improvement.
And in addition to this, we will ensure steady growth. From JPY 13 trillion, we will increase the revenue to JPY 14.5 trillion. In this growth, we will produce JPY 180 billion of profit increase through the steady growth. These are the 2 big pillars of what we are doing today.
The operations that will be largely improved is U.S. And U.S. will account for about 40% of these positive impacts that I described earlier. That's the intent.
And JPY 300 billion here, later I will provide the details. This is under our control. So there are things that I can disclose and things that I cannot disclose, but 90% are already visible within this box. We have to work out the details and this is still under discussion. But most of this number is visible.
And for the steady growth, which is JPY 180 billion, from JPY 13 trillion of revenue, we are trying to increasing to JPY 14.5 trillion. In the process of growth, we will increase the profit. So we will do it -- do this JPY 180 billion step-by-step. This is the only way to go about this.
As Karube-san mentioned earlier, in the first quarter of this year, in that sense, our sales volume was slightly below our initial expectation. So gradually, slowly but surely, we would like to increase the revenue in the next 3 years or this fiscal year and the next 3 years. This is the contents of JPY 180 billion.
And let me talk about JPY 300 billion, which is on the left-hand side. Please take a look at the next page. This is our production capacity. As you can see, in fiscal year 2018, we had the capacity here, which is approximately 7.2 million units globally, including China. We have 7.2 million units of capacity across the globe. And by 2022 fiscal year, with all the ingenuities and ideas, we would like to -- this is at the level of 6.6 million units. That's our intention. This is a figure including Chinese plants. Chinese plants are fully utilized today and we expect to fully utilize Chinese plants in the future. So if you exclude Chinese plants, we are intending to produce more than 10% of rationalization.
As you can see, this utilization ratio, it's at 69% today. And if we do as we planned, this utilization ratio will increase to 86%. 5,000 hours a year, this is the assumption that we are taking, which is kind of stretched. So based on 5,000 hours, 86% utilization ratio is healthy. That's what we are pursuing.
And as one of the actions, just as an example, let me show you the next page. Excuse me, I don't know how to put it, but if we specify the names, it's very sensitive, so I covered all the lines.
What we have done in fiscal year '18 and we are in the middle of fiscal year '19, many lines are stopped or reduced the capacity of -- there are 8 locations. In 8 locations, we have already implemented the actions. And the other one. From next fiscal year between 2020 and 2021, 6 -- and 6 locations at 6 plants, we may stop the line or stop the plant and reduce the capacity. That's our plan.
So far, what is ongoing? Some are done, some are ongoing is -- from 1 to 8. And from 9 to 14 are the headcount here. Mainly, they are direct workers. So direct workforce. If we count the headcount, 6,100 persons worth of job -- worth of capacity is rationalized. And if we do the entire plan, it comes to 12,500. So 12,500 equivalent capacity will be adjusted. So roughly, globally, we have 10x more of the headcounts for the direct workers. So in terms of -- this is the order of magnitude that we're addressing. And 8 entities are wherein we are taking actions and the remaining 6 entities are what we are going to discuss and make decision one by one.
This is the correction of the investments that we made in the past. Out of JPY 300 billion, this is a big portion that this accounts for. And the next one, please.
Simply put, this is about the investment going forward. It's selection and concentration of investments for the future. Less profitable items or items which do not anticipate profit increase, what we have been running will be stopped. So we will no longer spend money on these items. These are under discussions.
And approximately, in terms of lineup, the number of models, about 10% will be reduced. This is underway. It's ongoing. So I don't specify the names by compact cars, and that's the lineup, will be the main ones, which are specified and we decided what to be addressed.
So please go back. Next, please. Going back to the original chart. Out of these bar graphs, this JPY 300 billion, this JPY 300 billion, 90% of JPY 300 billion is being visible, that's what I meant.
From a different standpoint, next page, this is the purpose or intent of the actions we are taking from the top. In the ongoing midterm plan, slowdown in U.S. and issues in Europe are affecting the performance. And although we grew our business elsewhere, JPY 13 trillion of revenue is stagnant.
In terms of sales volume, it's staying at -- hovering at around 5.5 million units between '17, '18 and '19 fiscal years.
So as I said, in order to ensure steady growth of 3% per annum, at least 3% of growth per annum is what we are pursuing and reach JPY 14.5 trillion of revenue eventually.
In terms of sales volume, we will sell 6 million units. And this is equivalent to 6% of operating margin. That's what we are trying to do.
Fixed costs. I said we are addressing JPY 300 billion and 90% of this was -- is visible.
In the next 3 years, including beyond that, we will continue investing for the future growth. So naturally, we will make investments and this will increase the fixed costs. Especially for the R&D expenses, based on the level of R&D expenses in '18 and '19, we are going to increase the amount by 10%. By doing so and be prepared for the future, JPY 300 billion which is already invested or in -- the investment for the future, we will reduce the fixed costs at the same time. So as a consequence, against the latest fixed cost level, R&D expenses will be increased by 10%. But in terms of absolute level, there'll be a slight decrease in fixed costs. That's the plan that we have.
And another big pillar is JPY 14.5 trillion of revenue with a 3% growth rate, steady growth. That's what we have to do. We don't have an answer today, but we will make investments, deliver new products and new technologies. And as I announced last time, we will promote Nissan Intelligent Mobility from the upstream and to downstream. With this consistent strategy, we will gradually enhance the brand value of Nissan and increase the profitability and sales.
Next page. This is a repetition of what I said. During this time, 20 new models will be introduced in the markets, and we are in line with the plan.
In -- amongst this, on the top left, you see a Skyline. As we have announced, Skyline is the latest ProPILOT 2.0. These new models will be coming to the market and the average age portfolio, average portfolio age is over 5 years. But this will come down to 3.5 years. This is the -- one of the big factors translating to the steady growth.
Another technical aspect. We have been pursuing zero-emission. We said that we are leading electrification at the basis of Nissan Intelligent Mobility, EV and zero-emission, which is on the left, EV. And on the right, we have e-POWER. Each one has 2 motors and have a four-wheel-drive, high-power, high-performance product will be launched during this time and we are preparing for the launch.
So the current Nissan LEAF and the current Note and Serena e-POWER, in addition to this, we have -- we will deliver wide variations. In EV, we have kei car EV and the big Kicks Crossover and D segment cars. And for e-POWER, we are going to offer high-power with 4 motors, bigger cars. As an FR vehicles, this will be replacing it and we are preparing for this.
And the other one -- another technological items. This is about autonomous driving. User-friendly autonomous driving technology is what we are delivering. We started with the ProPILOT and 13.5 million units are used already -- excuse me, we are going to increase it to 1 million units. And technically, we will update the technologies and ProPILOT 2.0, which is adopted on the new Skyline, which enables hands-off single-lane driving. This is a car that we offer. And during this time, we are going to -- we are introducing next-generation AD technology which enables an eyes off on freeway, which is called Level 3 generally. And this technology will be commercialized and delivered to the markets.
Technological development and commercialization technologies will help us increase the revenue from JPY 13 trillion to JPY 14.5 trillion. And this is the background of the 20 new models that I referred to earlier.
Another latest news, which is on the next page. In the field of new mobility services, we have agreed on the partnership with Waymo and driverless vehicle service will be developed amongst us. This has already kicked off. As early as possible, we would like to offer this driverless car service in Japan, and that's what we are working hard towards.
That was lengthy and what's beyond. This is just a summary. Today, our profit is poor. But in the latter half of this year and next year and 2 years down the road, in fiscal year 2022, we would like to continue to recover and reach JPY 14.5 trillion of net revenue and 6% of operating margin. That's what we are envisioning.
And CASE, introduction of CASE, we would like to advance in the industry. Based on the strategy of Nissan Intelligent Mobility, we will promote EV, a wider application of EV and electrified vehicles and new mobility services. In these areas, we would like to take leadership. This remains unchanged. And in fiscal year 2022, we would like to reach this revenue and profit. This is what the top management should do, and we are working on this.
In addition, our executive committee, half of them are revitalized. So these new generations of leaders will be prepared for what's coming beyond 2022 and work on remaining pieces of homework which are written here.
So in a summary, brand strategy, including Infiniti, brand reinforcement or brand rebuilding is what we have to do. And technology of Nissan, technological excellence of Nissan, we need to identify the next challenge of Nissan of technology.
In the area of new mobility services, in a wider definition, we need to shift from B2B to a B2C business or evolve our business to B2B to B2C. This should be the minimum requirement that we need to satisfy, mainly led by the new generation of leaders and identify what to do in the next 3 years.
In addition to this action plan, we need to make sure the next 3 years will be enriched. That's what we are working on.
That concludes my presentation. If I may, I would like to answer your questions, including the subjects about the financial results. Thank you.
Now we would like to begin the Q&A session. [Operator Instructions] Those of you who have questions, please raise your hand. The person at the center. Yes?
[ Watanabe ] of Nikkei Industrial. I have 2 questions. You said the environment is challenging and one -- first Q, reduction of operating profit by 90%. Sales reduced. Was that lower than your projections? And what was the reason behind the underperformance against your expectations?
Secondly, about the full year projections, is there an upside? And if so, what measures do you have in mind in order to enjoy the upside?
What's your second question?
Well, it's related to the second question and the reasons why your performance is below your expectations. But if that is to continue in the second to the fourth quarter, what are the measures that you have in hand?
Thank you very much. True that in Q1, the results were really negative than we had expected. Not to push wholesale and increase retail sales, that was the original plan and the starting point. And in Q1, we are planting the seeds. We planted the seeds, we weren't overly aggressive in the push and we tried to reorganize the car flow. So in the end, wholesale revenue isn't going to be big. That was within the expectations, as Mr. Karube has mentioned in his comments.
Against the retail sales, wholesale, because we avoided aggressive push, retail sales outperformed. And therefore, the dealers' inventory is steadily going down, which is a progress. So normalization of sales is making progress. But at the same time, however, in the end, the revenue number in Q1 was challenging. But that was already expected. We knew that Q1 would be at the bottom in terms of revenue.
But your question is whether the results are in line with our expectations. But TIV included retail pace. We thought that the situation will be challenging, but the actual retail performance was slightly under what we had expected and we have to admit that. But in the second, third and fourth quarters, we think that we will be able to gain back what we underperformed in Q1 in terms of sales volume.
In TIV, barring any unexpected downturn in TIV, as we continue with the normalization of sales, we think that sales volume -- retail sales volume will increase, leading to revenue increase. And we think that, that kind of ecosystem will be established.
Most recently, we're now at the end of July, but the starting point of Q2 is in line with our expectations. So related to your second question on what would happen between the second and fourth quarters, during those 3 quarters, we think that we can gain back and bring it up to the level that we had expected.
The person in the middle, please. Sean?
Sean McLain from The Wall Street Journal. I was wondering if you could clarify something about this 12,000 person figure. The 12,400 -- was it 12,400 layoffs, is that just workers from manufacturing facilities? Does that include people at headquarters as well? For example, I've heard that some things have happened at Nissan North America in Tennessee. Does that include, for example, request for early retirement or buyouts in general?
Basically, what you see here are about plans but part of the indirect workers are included. Roughly speaking, as I said earlier, one of the order of magnitude is that capacity of the plant will be reduced and we have a specific action underway. To be precise, this includes indirect workers, so personnel reduction, including indirect workers is what you see. Seki-san, any supplementary comment?
I am in charge of Performance Recovery. My name is Seki. Thank you for your question. In this chart, you see the top half and bottom half. The top half, the some -- some of the lines or some of the regions in the top half, we have indirect workers in the plants included. But it's very limited in number. And you asked about Smyrna headquarters figures or the headcount is not included. But the bottom half, 6,100, in principle 6,100 here are direct workers, indirect workers of the plants. That's all.
So in that sense, these are the items. And this is part of JPY 300 billion that we are discussing. Just -- this is just to show you the order of magnitude that we're addressing.
Yes, the person next to him.
My name is [ Okada ] of Nikkei Newspaper Company, I have 2 questions. The cost of business transformation, you haven't downward revised your guidance. But the headcount reduction of 12,500 people, is that expense factored in? What's the total expense? And what would happen this fiscal year? And are you going to provide for this expense -- the total amount by the end of this fiscal year? Or will there be leftovers in the following years? How are you going to provide for the headcount reduction expenses?
And can I go to the second question? U.S. market. You mentioned inventory level and the incentive reduction efforts. But what about the lease business? Lease asset at the moment, what's the current level? And with U.S. economy peaking out, what would be the loss of the residual value? Is there going to be a time lag? So you mentioned inventory incentive at fleet level, but lease asset residual value, what's your projection?
Thank you very much. On the first question, I'm going to ask Karube-san to supplement later on. But to your question, Okada-san, there's already provisioning provided for. But if I say we will do it, then they would have to account for new provision, but there are some lines that we haven't decided on, but there will be some items that will be provided for in the future. And when decision is made, then we will sufficiently provide for those projects going forward.
And going to your second question on the residual value of the lease assets, later on, Karube-san will add to my comment, but you're right in your point. Nissan -- this applies not just to Nissan but Infiniti as well. But this is just a general point. All businesses have exposures, so this is a concern. So Karube-san, would you like to add to that?
Yes. There was that table of the 12,500 and what we've already done. For the upper portion, we've already provided for by the end of the fiscal year 2018, extraordinary loss about JPY 40 billion -- slightly over JPY 40 billion of extraordinary loss was accounted for.
And for the downward portion that's shaded in yellow, each time we decide on the number we will provide for the provisioning. Until we decide the concrete numbers, we cannot calculate the amount expensed necessary. So best estimates will be accounted for every time we decide on the numbers. According to expectations, we are determined that we will be expensing about the same amount.
Generally speaking about the residual value, there are concerns about downturn in the U.S. economy, but for the time being, in the past 2 years, we had not realized any residual value losses. There has been some gains rather. But as you have pointed out, if there is any sudden downturn in the U.S. economy, that's a concern, so we will continue to monitor the situation closely.
Thank you. Yes, the person in the front seat, in the middle, middle.
[ Magazine X ]. My name is [ Shingoji ]. You say that you are reaching the bottom of the performance. That was well understood based on the performance. And you are reducing the cost, reducing headcounts and reducing the capacity. On the growth side, you're increasing EVs, work hard on autonomous driving and work on mobility services. These are clear. And move to 2022, we need to watch the results. What should be the key milestones to see whether the recovery plan is successful? Even if you say that you are recovering in 3 years, it's too fuzzy. Could you give us key milestones to show the progress?
I totally agree with you. Roughly speaking really, this is really a ballpark. I may have said that earlier. We are not -- we have specified what should be eliminated and which should be reduced. And when these are decided, we can tell you and this will deliver tangible results. But what's the most difficult one is gradual recovery of sales or revenue. That's harder to show. I tried to be more effective in explaining, but it's really difficult because what we need to only show the results. Results speak for themselves.
The cost side. With regards to cost side, our specific plan should be shown to show the progress. But when it comes to growth of revenue and as a result, this is contributing to profitability, for this part, at each time, I want you to look at the results.
The sales volume, which is 5.5 million units today, and from this point, with regards to sales volume, we have very conservative expectation. Even at 6 million units, we're assuming to produce profit increase. So while we boost the sales volume, well, this is really difficult in fact. Revenue per unit is where we will like to produce real profit. In the United States, for example, for every spend, if you look at the results, you can see the progress of our actions. Especially when you talk about the U.S. recovery, statistically, I'm not sure that we can deliver the objective results here. But the sales volume itself, we are not thinking of largely boosting the sales volume. Rather, we are enhancing the quality of sales. Rather than reducing fleet mix, we want to increase pure retail, real pure retail, that's what we want to boost. That's what we want to largely increase, pure retail. And how much is it progressing is what you can see. Then if you see this, you can see whether our actions are bearing fruits.
Today, in the first quarter, where are we today in U.S.? Unfortunately, we see some of the results, but it's not as obvious in your eyes. When you look at the results of the first half of the fiscal year and then the second half of the year, you can see the increase of retail volume. If the retail volume increases, the revenue or the discount will be totally different from the lower retail volume. So the issues that we used to have in the past will be eliminated. So it's not only about reducing fleet mix, we need to increase the pure retail, that's what you need to look at. I think this is the best way to look at the progress.
Thank you very much. Yes?
[ Kimura ] of Asahi Newspaper Company. I have 2 questions. First, improvement of efficiency of the production lines. You're trying to reduce the production capacity, then that would mean if you have 2 lines in Japan, you reduce 1. Or you're also thinking about suspension or closure or sales of manufacturing plants. 14 locations have been targeted. Are these all overseas? Or some production sites within Japan?
And another question. Saikawa-san's responsibility. At the AGM, you talked about the responsibility you have to fulfill and you now have shown the pathway to fiscal year 2022. But to what extent do you think that you will be serving the current position to serve your responsibility? Nomination Committee is discussing your successor. So that point included, how are you going to take responsibility?
Thank you very much. On the production line, as I said in the presentation, I think there are 2 sides to the story, you know this already. But in a certain plan, 1 of the 2 lines have been suspended in some plants. So one way is to suspend 2 -- 1 out of the 2 lines. Or in some locations, we may choose to also suspend the second line of the 2 lines. In other words, suspend both lines. And we are already beginning to specifically consider those plans amongst the production lines that we have shown to you. This is a crude description. But loss-making overseas facilities would be the main targets.
So how do we better utilize the domestic capacity? That's a different issue. And of course, depending on the model, there could be differences in terms of the [indiscernible] of supply. But we are targeting Nissan Power 88 invested lines that were built for compact cars. And I think much of our plan is to reduce those capacities.
If I specify the location, that may be taken as a final decision. So I cannot make any further comments, although I would want to. But Datsun was included in the portfolio and I also said compact cars and foreign venues and investments that we made during Nissan Power 88. So that are clues that you can guess from. Those are the main production lines. And in some cases, we may close just 1 line. Or in some cases, we may choose to close the total plant.
And also the second question was with regards to the execution of my responsibility. July is the month after the AGM and everyone told me that we've gone through a certain busy period because AGM has already been completed. But we're in fact even busier than before the AGM because we've now transferred into a 3-committee company. And as I have said, a major milestone of the responsibility was to transform into this format of the company. So that responsibility has been met. So going forward, we hope that the successor discussion will make progress in the Nomination Committee. I don't have the decision-making power. But I can offer as much support as I can as possible so that we can create an environment where we can hand over the management rights to the next generation.
Today, I've been talking about the JPY 14.5 trillion and 6% margin and the Nissan Intelligent Mobility we are plowing today to realize the gains. And until I put those Cs on to the road map or on the trunk, it's my responsibility, our generation's responsibility, so we're working on that.
And on top of that, I showed you the second half of the table, the remaining homework and preparations for the next 3 or 6 years. That is something that should be done by the next generation.
If you look at the membership of the Executive Committee of Nissan, you will see that there is some continuity. In other words, members that are there to do what we've already started. And then there are members that will take on new initiatives. So it is currently a mixture in terms of the membership between new and old. But these are things that should be done by the next-generation leadership.
I cannot say when I will do what, but on the 25th of June, the General Meeting of shareholders had taken place and the new leadership came into power at the Board meeting thereinafter. And today, the second Board meeting had taken place and each committee is discussing based upon such -- these deliberations at the Board meeting. So speed is fast in terms of deliberations at these committees. Usually 1 year is necessary. But we transformed into a 3-committee style company in just a matter of 3 to 4 months, although it usually takes about 1 year. So you can expect that things will move, that we will not require 1 full year to make changes in the leadership as well.
We are running out of time. So this will be the final question. Hans, it's your turn.
Hans Greimel, Automotive News. Can you give us a little bit of a vision of your -- how the United States market will look and -- at the end of fiscal year 2022? You don't expect the sales really to recover to the levels of fiscal year '17, '16, '18? I guess you're still expected to be lower than that. But can you talk about what percent of retail sales you will have in that year compared to now? Or what your regional operating profit margin will be in that year compared to now? Or maybe what your market share will be that year compared to now?
And then as a second part of the question, can you please give us some details about the first 8 site locations that you've already reduced headcounts? Can you tell us any details about where they are or where that's happening?
Thank you for your question. U.S., there are some challenges and let me give you more details. Sales volume, the market, we anticipate a conservative volume for the market of U.S. Because irrespective of how the macroeconomy turns out, including competition of the market, I think it's reasonable to have a conservative assumption for the TIV in U.S.
How about sales volume and market share? For this fiscal year, based on the sales volume that we expect, I'm not trying to largely increase the volume from what we have announced this year, including Infiniti, 1 point -- if we reach 1.4 million units, we think that this is sufficient to generate enough profit.
So in terms of market share, 10% that we initially expected, 10, 10 was what we try to pursue. But compared to this 10, 10, we are looking for a more healthier road map or trajectory.
And how are we going to enhance the profitability? As I said, our parent volume will remain unchanged practically. But the pure retail, pure retail, roughly speaking today, we are trying to increase this pure retail by 100,000 units. This is a big challenge. If we increase the pure retail by 100,000 units, we -- it means that our brand is appreciated by the market. So I think this is one of the key milestones that we should watch.
Revenue and profit. In the past, we were topping 8% of profit margin. And today, we see a big decline. It declined by 5 percentage points or 6 percentage points. So from what we see today, how should we enhance the profitability is the question. 4 percentage points is how much we would like to boost the profit margin. I don't think we will come back to the level that we used to enjoy. But topping 6% or 6%, translated to COP, consolidated operating profit, 6% is a level that we would like to recover and we are taking actions to this end.
And 4 percentage points, how do we generate this 4 percentage points of additional profit margin? Not much is expected from the sales increase. As I've said, we are shifting from fleet to retail. And selling expenses, we are anticipating big improvement in selling expenses. If we shift to fleet to pure retail, this will totally change the picture. So selling expenses will produce 4 percentage points of enhancement in profit margin.
But many regulations will be enacted going forward and cost in U.S. -- cost to build cars in U.S. will rise. So this will increase the costs. So this -- though half of the benefits produced by the selling expenses reduction will be compensated for by this cost increase. And fixed cost in U.S., fixed cost in the U.S. will be reduced, too. This will give us a benefit. And as a result, we can increase the profit margin by 4 percentage points, and this will translate to 6% COP level globally. That's our plan.
It's not about boosting the volume that we are expecting. More than -- if we sell more or if the TIV comes back more than what we expected, this will give us an additional upside. That's my plan.
Did that answer your question? And the second question -- the first one, plants. Details. Seki-san, to the extent that you can disclose, please.
In fact, I thought I will specify them. But because of many circumstances, I had to really cover or shade them. But partially, people know them. I think you know many of them. You know about many of them.
Eight lines at the top. It's global, diversified. But I'm sorry, as of today, I refrain from making a comment on the details in each country.
You can't say anything? You can't say anything?
No, I can't.
It's very difficult. I want to disclose it. But there are many circumstances that make us refrain from disclosing it. But for example, Indonesia. We suspended 1 line in Indonesia. You know this. And this is part of this top half, 8 locations.
In Spain, we suspended part of the line in Spain. Not yet -- yes, we did. Yes, that's included in 8 locations. And as Karube-san mentioned earlier, we have a provision already. So there are specific items that are done between the fiscal years '18 and '19. And if we add them all, it would give -- in terms of headcount, it translates to 6,400 people equivalent.
Can I say more? But if I say more, it will be too excessive, then the remaining will be obvious. That's what I meant.
We've gone overboard the time. So this will be the end of the meeting for the announcement of the first quarter financial results of fiscal year 2019. Thank you again for being here. Thank you.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]