Nissan Motor Co Ltd
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Nissan Motor Co Ltd
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We would like to now begin the presentation of the Fiscal Year 2020 Third Quarter Financial Results of Nissan Motor Co. We're most thankful that so many of you are connecting to attend this meeting.
Taking into consideration the recent situation, we are using the internet system and live streaming for this results announcement.
At the beginning, let me introduce to you the speakers this afternoon. President and CEO, Mr. Uchida Makoto; COO, Mr. Ashwani Gupta; CFO, Mr. Stephen Ma. Once again, they will be participating. Mr. Uchida, our President, will deliver remarks at the outset.
Thank you for joining us today. To begin with, I would like to express our sincere gratitude to all those around the world, who have been hard at work every day, managing the impact of the COVID-19 pandemic. Nissan continues to place the highest priority on the safety of everyone we work with and serve, including our customers, dealers, suppliers, employees and their families. We are doing our utmost to prevent infections while running our operations.
The world continues to face deep uncertainties, including another wave of coronavirus. The conclusion of Brexit created clarity in the policy environment for global trade and commercial affairs. Meanwhile, the interest to address environmental issues is accelerating globally and are beginning to necessitate a generational shift in the automotive industry towards electrified vehicles. This environment has only made us be further determined to achieve our Nissan NEXT business transformation plan, focus on quicker recovery of our performance and build the business foundation for the next era.
During last quarter earnings announcement, I said that we are making steady progress on our plan. And I am very pleased to announce that Nissan is maintaining a strong momentum after 3 months.
Our COO, Ashwani Gupta, will cover third quarter performance, and I will present the updated outlook for the full year.
Ashwani San, over to you.
Thank you, Uchida San. Hello, everyone. While we are facing universal human crisis due to the coronavirus that have added to the existing macro challenges and industry issues, it is encouraging, however, to see some more predictable patterns emerge recently in the global business environment. In the third quarter, we have seen a recovery in the total automotive market, which has begun to exceed the same level from last year. In our core markets, the United States has recovered to the same level as last year, while China has continued to exceed the prior year. Though Japan is higher than last year, this is because quarter 3 2019 was low following the introduction of consumption tax. Japan for quarter 3 this year is flat with respect to quarter 2. Europe in quarter 3 remained slightly behind the same level in 2019.
We are constantly adopting to changing environment and demands. Our global operations performed residentially while ensuring the safety of our people. First, Nissan's global production increased steadily in quarter 3 by 12% with respect to quarter 2. Second, our dealerships are nearly fully operational, with 98% of our dealers open for regular business. With more customers using virtual platform, we saw 74,000 sales coming through the Nissan digital experience. Moving forward in the new normal period, elevating digital customer experience will remain an important focus area for Nissan.
Turning to our new product launches. Thanks to the challenger spirit of our employees, we continue to deliver new products, starting from the Nissan Kicks e-POWER in Japan and Asia to the all-new Rogue in United States, new Navara and Frontier in Asia and Mexico, all-new Nissan Magnite in India and all-new Note e-POWER in Japan.
In addition to the new products, we have revealed under development products like the all-new crossover EV Ariya, the Z Proto and Infiniti QX60 and QX55. We are confident these will contribute significantly to our brand power and sales growth in coming months.
Taking a look at Nissan sales performance. During quarter 3, our sales steadily improved from the previous quarter, growing by 2.4%. In China, our sales of Nissan brand grew by 4.1% with respect to quarter 2, while our overall sales remained almost flat due to product and market mix. In Japan, our sales declined by 7% due to COVID-19 seasonality and also because of the transition from previous Note to the all-new Note.
In United States, our sales grew by 9.9%, thanks to the customer and dealer confidence in our current models and new product launches.
In Europe, our sales decreased by 7.3%, reflecting the impact of COVID-19 restrictions during the winter month, which impacted consumer confidence in the market.
In other regions, our sales grew by 15.2%, which also includes growth in India with the success of all-new Nissan Magnite.
Let me now talk through core market business performance in more detail. In United States, we are continuously growing retail sales month-on-month and quarter-on-quarter, while strengthening our quality of sales, steadily shifting the business from volume to value. During quarter 3, thanks to our value pricing, we continued to increase our net revenue per unit by 5%. Our key business touch points of inventory, fleet mix and selling incentives reduction contributed to quality of sales. The all-new Rogue has had a great early success, with our segment share reaching to 5.9%. The value pricing increased by 22% with respect to the previous generation. These are the positive indicators that customers are choosing the all-new Rogue because of the value and not just the price. We will continue our commitment to bring attractive products and technologies to the United States market while maintaining value over volume.
We are focused on stronger engagement with our business partners such as dealers and working with them to enhance our customer experience. This has resulted in significant increase in customer satisfaction. Nissan became the top 2 Japanese brand in 2020 from top 3 in 2019 in sales satisfaction index. Among all the brands, Nissan increased its position from 8th to 6th place. We also saw that in continuation of previous quarters, our products and technologies are earning industry-wide recognitions from organizations like J.D. Power, NACOTY and so on.
We revealed the all-new Pathfinder and all-new Frontier last week. We are confident that these will add to our profitable growth in the United States in the coming months. We are encouraged to see enhanced customer opinion on our brand improving to 63% just over the weekend following the unveil of these 2 cars.
In China, Nissan brand sales have grown both quarter-by-quarter and year-on-year. And we have increased our Nissan brand market share to 11.5% in CY 2020, which is the best record in the history. Importantly, we have kept our quality of sales with transaction price higher than the industry average. In CY 2020, Nissan Sylphy became the #1 selling passenger car in the Chinese market. Moving forward, the launch of new models with latest technologies should provide us the right momentum in China.
Looking now at Japan. Our quarterly sales increased year-on-year, with a slight decline with respect to quarter 2 due to COVID-19, seasonality and preparation for the launch of the new Note. Nissan improved our brand power and received #1 commercial favorability ranking 2 months in a row. Japan being our home market is continuing to show tremendous increase in the case leadership, and Nissan is closely following these trends. Nissan has electrified a cumulative 602,000 cars. In terms of autonomous features, we have delivered a total of 418,000 ProPILOT-equipped units to date. This shows a strong recognition of Nissan's CASE technologies in Japan. Our all-new Note with 100% e-POWER has received overwhelming acceptance from Japanese customers with more than 20,000 orders and a 41% take rate of autonomous driving feature with ProPILOT and Navi-link.
With upcoming all-new models featuring Nissan's advanced technologies, we have created a strong position for Nissan in Japan, which will add to sales growth in coming months. A common theme across our core market is electrification, which is at the core of our strategy. Nissan saw encouraging growth in electric vehicles during quarter 3, with LEAF sales growing 14% with respect to last year. We also have created significant excitement among customers for our upcoming Crossover EV Ariya, with over 100,000 expressions of interest globally to date.
Ariya is a perfect fusion of Nissan's strong SUV heritage and proven battery EV customer experience. Simultaneously, Nissan has been actively involved, creating a sustainable battery ecosystem. With our joint venture, 4R Energy in Japan, we have increased the sale of refurbished batteries by 25% in Japan. This will enable Nissan to make continuous progress toward achieving life cycle carbon neutrality in our vehicles and operations.
To summarize our progress of Nissan NEXT, we are significantly improving: number one, quality of sales by shifting from volume to value; number two, rationalizing our cost base; number three, accelerate growth with new models featuring advanced technologies. With regard to quality of sales, we have increased net revenue rate per unit by 1.7%. This also corresponds to reduction in rental mix, inventory and incentives. At the same time, we are improving efficiency and effectiveness of our operational cost. We brought down our fixed cost by 12% through cost efficiencies in operations, marketing, sales and general administration. As a result of all these efforts, we remain on track to achieve the goals of Nissan NEXT and prepare future growth.
Despite strong headwinds of total automotive market due to COVID-19, our focus on quality and sales and rationalizing our cost base led to positive operating profit of JPY 27.1 billion, a positive free cash flow with JPY 38.7 billion on an equity basis without China and JPY 85.8 billion on a proportionate basis with China. As we can see, this is the second quarter in continuation after quarter 2 that Nissan free cash flow is positive, which gives us confidence of having operational efficiency in sales, costs and investments.
Moving now to our financial results for 9 months ending December 31. The right-hand side of the chart shows the financial results for the quarter. Operating profit for the third quarter was JPY 27.1 billion, operating profit margin, 1.2%, which increased from the prior year. Though this is a single quarter result only, it demonstrates that we are gaining momentum and recovering towards the Nissan NEXT fiscal year 2021, operating profit margin target of 2% on a management pro forma basis. Given the decline in sales volume, consolidated net revenue for the 9-month period decreased to JPY 5.32 trillion. The operating loss was JPY 131.6 billion, and the net loss was JPY 367.7 billion.
Let's now look at the transition from quarter 3 2019 to quarter 3 2020. In quarter 3 2019, we had an operating profit of JPY 22.7 billion. Moving from there, we had significant headwinds due to volume drop mainly due to COVID, which amounted to JPY 55.4 billion, while ForEx amounted in JPY 37.8 billion. Despite headwinds, we have been able to improve our operational performance, primarily with value pricing, lower incentives as well as cost reduction of JPY 40 billion and JPY 57.6 billion, respectively. This also partially offset raw material cost increases, which resulted in an operating profit of JPY 27.1 billion. We continue to maintain strong level of liquidity despite the challenging environment.
At the end of December 2020, cash equivalents were nearly JPY 2.0 trillion and net cash total was JPY 525.5 billion for the auto segment. Furthermore, we still have unused committed credit facilities of approximately JPY 2.1 trillion as of December 2020. That brings me to the end of quarter 3 and first 9 months results presentation. Based on these results, we believe Nissan NEXT has not only started demonstrating our business recovery, but is also leading to important areas of growth for our future.
I will now turn over to Uchida San to walk through the outlook for the remainder of FY '20.
Thank you, Ashwani. Last November, we announced our sales outlook for this fiscal year at 4.165 million units. Since then, the COVID-19 pandemic has continued to spread around the world. In Japan, the number of infections has increased significantly, which led to the issuance of the current state of emergency. Furthermore, the auto industry is facing a shortage of semiconductors globally, and it is challenging to produce the necessary volume of vehicles to meet consumer demand. Taking these factors into consideration, we are revising downward our sales outlook for this fiscal year by 3.6% to 4.015 million units. We will continue to make efforts to minimize the impact of the semiconductor shortage. At the same time, we will maintain our focus to improve the quality of sales and profitability and not chase after excessive volume.
Next, I will turn to our outlook for this fiscal year. Based on the third quarter results and updated sales outlook, we are revising our full year financial outlook as follows. We are revising down our forecast for consolidated net sales revenue by 3% to JPY 7.7 trillion to reflect the reduction in sales volume. We now foresee a consolidated operating loss of JPY 205 billion, which is an improvement of JPY 135 billion from the previous projection, demonstrating the progress of Nissan NEXT in quality of sales, Monozukuri and fixed cost optimization.
Net loss is forecasted to be JPY 530 billion, an JPY 85 billion improvement from the previous estimate. The improvement in net loss is smaller than that of the operating loss, primarily due to the increase in tax.
Last November, our previous guidance for consolidated operating loss was JPY 340 billion. Compared to the previous outlook, the variance was the revised estimate of JPY 205 billion is as follows. The decrease in sales volume is forecasted to have a negative impact of JPY 57 billion. Sales performance, including the improvement in sales incentive per unit, the decrease in marketing and promotion expenses as well as the improvement in sales mix are expected to have a positive impact of JPY 60 billion and offset the negative impact from the decrease in sales volume. The sales finance business is expected to have a positive impact of JPY 51 billion due to a release of loss provisions and lower interest costs.
Monozukuri performance and others are expected to have a positive impact of JPY 81 billion as a result of an improvement in variable costs as well as progress made in fixed cost reductions. Under the Nissan NEXT business transformation plan, we previously announced that we aim to reduce fixed costs by JPY 300 billion in fiscal years 2019 and 2020 versus the cost base in 2018. Our latest forecast estimates that the amount of reductions will be around the JPY 330 billion excluding any onetime reductions or delays due to the COVID-19 pandemic. This concludes the variance analysis on operating loss.
As you can see from today's announcement, the company is on track with Nissan NEXT. As Ashwani mentioned, our new models are steadily driving our global sales recovery. In addition to the Nissan Pathfinder and Frontier premiered just last week, we will be introducing a series of attractive vehicles that demonstrate Nissan's uniqueness, with the Nissan Qashqai and Ariya as well as all refreshed models, Infiniti QX55 and QX60.
Nissan will continue to launch the right products at the right time to meet the diverse needs of our customers. We recognize that uncertainties will continue, but through the ongoing execution of our Nissan NEXT plan, we will ensure steady, profitable growth, capitalize on 4 competencies, enhanced quality of business, ensure financial discipline and restore Nissan NEXT.
Nissan will focus on our core business, our products to become a truly profitable company even if operating in a severe environment. We will collaborate closely with our alliance partners as we focus on our Nissan NEXT milestone to return to full year profitability, with a 2% operating margin by the end of fiscal year 2021 on a pro forma basis. Nissan is also contributing to the development of a cleaner and sustainable environment. We have recently announced our goal for Nissan to be carbon neutral by 2050. To meet this aim, we set an ambition to electrify 100% of our all-new vehicle offering by the early 2030 in key markets. Nissan LEAF is on the steadfast journey, while Ariya will ring in the next-generation of EVs. We will expand our lineup with 100% electric drive e-POWER technology globally, debuting in the all-new Qashqai in Europe and Sylphy in China. We must achieve this by staying true to our DNA, the spirit of innovation and challenge as we intend to enhance our corporate and brand value.
In closing, I want to emphasize that our results demonstrate the strong commitment of our employees to reestablishing Nissan-ness and cooperation of our suppliers and dealers in helping to bring about a new era for our company. We are committed to regaining our stakeholders' trust as quickly as possible as we drive innovation to enrich people's lives.
Thank you for your kind attention.
Thank you very much. Now we would like to move on to the Q&A session.
[Operator Instructions] Asahi Shimbun, Kamizawa San. Kamizawa San of Asahi Shimbun.
I am Kamizawa from Asashi Shimban. I would like to talk about better quality of sales. In U.S., the sales, you are increasing price and value pricing. On the other hand, if you take on these initiatives, you may struggle to increase sales. New Note compared to last -- the sales seemed to decrease compared to last December. How do you see the impact of all these actions taken by Nissan?
Thank you for the question. Now I would like to take on the question. And later, I would like to ask Ashwani San, who is in charge of the operation to give you further details. Last year, in the third quarter -- last year's third quarter with regards to U.S., I was asked when we are going to hit the bottom and when we will be pursuing recovery. That was what many people asked. At the time, I said that the strategy to enhance quality of sales is the right one. But having said that, I said, it is taking more time than what we expected to recover our performance. Today, as well as the earnings announcement we made last time, U.S. operation, I'm happy to say, is on the right track toward recovery. Therefore, as we -- starting with the introduction of new Nissan Rogue, we intend to introduce strong products in the U.S. market, so that this translates to a strong recovery, and I am confident about this.
Earlier, you talked about sales volume and other details. Naturally, it's about operation and business. Therefore, in order to enhance market presence, we have to monitor volume, but I said we are not pursuing excess of sales. That's our direction. The details will be provided by Ashwani San.
Thank you. Thank you for this question. At first, when we talk about value pricing, it's not about the price increase. It is how much customer is recognizing the Nissan technology and the product. So this is exactly as per the J.D. Power PIN, the customer is willing and is paying for the new Rogue, which is driven by the value and not by the price. And this is directly impacting our profitability, but also the net revenue per unit. So that's what about the value pricing. The second thing about the retail, I was just looking at the data after having your question. Our quarter 3 last year and this year is almost flat. But when you look at the retail sales, we are increasing month-on-month. The challenge which we had and which turned into an opportunity that we created the customer demand between the previous Rogue and the all-new Rogue.
And when we started the new Rogue in December, we were already sold out the old Rogue. And that's why if you look at only December, you will see a gap in the retail. However, when you look at the full quarter, and especially now in January, when the Rogue is fully being retailed, we have gained the market share, as I have explained before, to 5.8%.
Okay. Thank you very much. Okay, moving on to the next question. Nikkei Shimbun, Oshikiri San. It's your turn.
Yes. I am from Nikkei Shimbun, my name is Oshikiri. I have one question. This time, the sales forecast has been reduced by 150,000 units. What is due to -- how much is due to the shortage of semiconductor? Note production reduction was reported by some media outlets. In which regions do you see the impact or potential impact of semiconductor, including the impact on revenue and profit?
Thank you for your question. What I can say is that the sales volume reforecast, this includes the factors that you indicated, which is the impact of semiconductor as well as risk of the COVID-19. At the same time, if you look at the -- including the impact on the profit, we provided the new forecast, which is JPY 205 billion of operating loss. For regional breakdown, we are not ready to give you the regional breakdown. But every day, the -- we are trying to improve the situation on semiconductors while working with suppliers. And in these circumstances, we are mitigating the impact of the semiconductor, and that's all what we can say today.
I couldn't give you a straightforward answer. But what I can say is that we are assuming sufficient risk, and we are doing our best to minimize the negative impact that we foresee. That's my reply.
Going on to the next question. Yomiuri Newspaper Company, Mukoyama San.
Mukoyama of Yomiuri Newspapers. Coming to my question. Last year, in November, you announced the profit of next fiscal year. And Mr. Uchida had spoken with confidence. Thereinafter, there has been a new wave of COVID-19 and shortage of semiconductor supply. So there's more in transparency uncertainty. Once again, can you confirm with us your determination for profit-making next fiscal year?
As you have indicated, there is much uncertainty with regards to the pandemic, and we need to closely watch the situation as well as the semiconductor supply but as you can see in our results announcement for Q3 on equity basis, plus JPY 27 billion, 1.2% margin has been achieved. If China is included, it will be 2.5%. So even in the midst of pandemic and shortage of semiconductor supply, this is a single quarter result, but we think that this has contributed to going back to the track of profit making. So Nissan NEXT is focusing on the foundation of finance and minimization of fixed costs and with upgrades and elevated sales from new models and profitability. If you look at next fiscal year, U.S. Rogue and Note on full year basis, we think that these countermeasures will contribute to revenue and profit. So that taken into consideration. Although there are short-term uncertainties and challenges, and I'm speaking about the uncertainty with regards to the pandemic in semiconductor supply. We steadfastly think that we will be able to generate sufficient profit. And even judging from the results of Q3, I think this is great evidence that we are confident for next fiscal year.
Moving on to the next question. Shindo San. Shindo San, it's your turn.
Yes, Magazine X. My name is Shindo. Uchida San, looking at the documents, I understand that business circumstances have a negative impact, but you are achieving the milestones toward recovery. As a Japanese person, I am looking forward to the recovery and comeback of Nissan. And it's a bit different subject. I would like to talk about environmental activities and electrification, which is a key to the green initiatives. The other day, Nissan announced to reach carbon neutrality by 2050. And to this end, you said in early 2030s, you are going to electrify all the new car offerings.
And today, you are saying about the collaboration with the railroad company where you are using the refurbished battery for the railroad crossing. So you are working on Nissan Green program, I understand. Based on electrification, what are your actions? Could you talk about your commitment and ambition on this front?
Thank you for your question. The railroad crossing battery is one initiative. In 2010, we introduced the first generation Nissan LEAF to contribute the zero-emission society. Over the past 10 years, we have developed a lot of experience and know-how. And such -- there's no one else, but Nissan, who has this kind of rich experience and know-how. We are not just selling EV. Through EV sales, we are contributing to society from different aspects. Battery is used as static battery source for house and building at the time of natural disasters. This can be used as emergency power supply. And we are also reusing the old batteries for energy. As Ashwani San mentioned, is one good example. In Japan, using EV, we are working on blue switch to address challenges and more than 100 partnerships were concluded at the plants, vehicle assembly to enhance efficiency of productivity and energy management and enhanced efficiency of the materials that we consume.
Climate change is a globally common theme, and this is one of the obligations of a company to fulfill. While we address these issues, we need to deliver profits. And unless we do this, we know the companies will never be appreciated. And Nissan -- through Nissan Green program, we intend to address many environmental issues and contribute to the solution, to the climate change. And we will increase the scope and speed of our initiatives to contribute to the society, and this will then translate to the growth of Nissan. Nissan is trying to coexist with human beings and nature. And to this end, we are driving the innovation. This is our ambition to enhance the corporate value of Nissan.
Moving on to Nikkan Jidosha, [ Jase Besan ], it's your turn.
Nikkan Jidosha, Jase Besan . I have a question about Japanese market. Once again, I would like you to elaborate on Japanese market. In Nissan NEXT, you are gaining momentum toward the performance recovery. Nissan Note as well as Ariya will be introduced later. And what's your ambition or expectation towards Japanese market? This is a question for Mr. Uchida.
Yes. Thank you for the question. Let me share with you the ambition. And then let me talk about activities and strategy. This will be provided by Ashwani San who is in charge of the operation. Japanese market is our home market, indeed. Unfortunately, in the -- because of the past management, we were unable to make enough investments in this whole market, and we didn't put enough energy in this market. So this year, we introduced new Note. We revealed the new Note. This is well received in the market, and Nissan Note is equipped. There's a lot of electrification technology of Nissan. Once you test the car, you know this is the Nissan. And going forward, we are going to implement these kind of strategies in our home market. And deliver things that make you feel Nissan-ness in Japan. And along with the electrification, we are going to start businesses and contribute the businesses in Japan. This is my ambition. First, in this whole market, we want to develop understanding of the customers about Nissan's true value. Specific activities will be provided by Ashwani San. Go ahead, Ashwin San.
Japan being our home market, what is very important is to fulfill the expectation, aspirations of Japanese customer. Number one, what is the #1 aspiration of Japanese customer. If you look at the Japanese market, 63% is exclusive Japanese customer requirement, starting from K-car to the slide door vans and so on. Second, if you look at the use of the technology, whether it is internet, whether it is software, whether it is hardware, whether it is advanced technology, Japan is the market, which drives the technology. So if you look at these 2 things. At first, Nissan has to develop the Japan-specific products, which Nissan is doing, as you saw, Dayz than Rogue, which is the kei car segment for Japan. And Nissan will continue that. In addition to that, whether it is kei car or a Skyline, Nissan does not -- will put a hierarchy on the advanced technology. We have put the autonomous driving feature, which is ProPILOT on kei car because we believe that the customer needs it even on the kei car and also on the Skyline. So if I summarize, Nissan is going to focus on new products, specifically for Japan and also on the new technologies. We have launched Rogue, then we have launched Kicks e-POWER, now we have launched all-new Note. And months to come, we will be coming up with new models, which are already planned, Ariya, then Z and so on in the pipeline. Thank you.
We now go on to the next question, Automotive News, Hans.
You can hear me, correct? I'd like to ask about the United States and electrification plan. You have this goal to electrify everything, all your offerings by 2030. Does that apply to the United States as well? And what kind of market penetration do you think you can get from your electrification in the U.S. around 2030? And one more question about that. A lot of automakers are coming out with big investment plans in electric vehicles, and particularly, we're talking about billions of dollars being invested over periods of 10 years or a decade or so. How much investment do you see Nissan needing to make in electric -- or electrified vehicles through 2030 per se?
In the first half of 2030 for the new vehicle sales, new models in key markets, we think that we would be able to reach electrified vehicles 100%, and that applies to the United States. But it depends on customer preference. They make their judgment. So we have to be well prepared so that we will be able to meet the customer demand. On the other hand, your other point of the question was investment on electrification and as we draft our electrification strategy, we are prepared to make estimations on our investments. And at this juncture, I cannot give you any specific number, but we will be proceeding with Nissan NEXT. And as we look at a longer horizon beyond NEXT, we would like to, on a separate occasion, explain that point to you in more detail.
Thank you, Hans. So to -- first of all, we want electrification to be the consequence and not the objective. This is why Nissan was the pioneer in 2010 to launch the first battery EV. Now coming to the footprint of Nissan, as you know, that we have got a battery in the sly scheme in China, in Japan, in Europe and in United States. In United States, we have a battery localized over there. So when it comes to Japan, as I explained before, we are absolutely on track to achieve our electrification because customer is recognizing it, because it's going to be competitive and because the environment will support it. When you go to Europe, as we said, by end of 2023, we will have 100% of our products to be having offer on the electrification.
Now moving to United States. We have launched LEAF since 2010. And as I presented today, our sales of LEAF is increasing month-on-month in United States. Having the competitive example to have battery as well as the EV manufacturing in the United States, now we are working on how we transit from ICE to the electrification. We do believe that United States is going to copy the electrification mechanism in the other part of the region. And as soon as we are ready with our electrification strategy for United States, we will be talking about it. But we -- it's on the way.
We would like to move on to Frankfurter Allgemeine Welter San.
Do you hear me? Patrick Welter for Frankfurter Allgemeine. Sorry the delay. Please allow me to ask the question in English. I have 2 short questions. First, can you tell me when do you expect that the shortage of semiconductors is going to end? Will it be in the first half of the next fiscal year? Or will it be the second half? And second question, there was so much talk about Apple and electric vehicle. Have you been approached by Apple to produce that vehicle, and would you be interested?
Ashwani San will provide the first question. While, second question will be answered by me.
At first, why there is a semiconductor global shortage. Of course, there is a mix of automotive usage and nonautomotive usage. The automotive usage went down and nonautomotive usage went up, very simple. Second, the application of semiconductors because of the advanced technologies in the new car. I think each car is having higher sensor ratio as it was before. 2 reasons. Now markets are coming back. Obviously, there is a mix, and we have this shortage. Now as Nissan, this global shortage has impacted us. We have -- but on the other side, this has given us opportunity to align the flexibility because Nissan is very strong in standardization of the parts to the Tier 2, Tier 3, Tier 4 levels. And we detected this in the month of November and December. And since then, we are working very closely with the suppliers on getting out from this situation. Nobody has a crystal ball, but we believe the cycle is normally 6 to 7 months after you decide on the capacity increase. And we think that by May or June next year, I think the whole world should be out of this crisis. Once again, this is based on the assumption of the automotive mix and the nonautomotive mix, and we have to just watch what happens in the coming 2, 3 months. But we do believe that in May or June, we should be out from this crisis.
Coming back to the first question, Apple is -- there's a possibility of concluding the partnership with automaker? And how do we see this? Is this your question?
Yes.
Case, if you think about the era of case, car is not just a means of transportation. It's about delivering new customer value. In order to meet this expectation, over the framework of traditional auto industry, we need to take new initiatives. To this end, in each sector, we need to work with the companies who are knowledgeable with good experience through partnership and collaboration. So this is an option that we may take. So when new companies emerge auto industry, that's a possibility too. So going forward, we are undergoing once in the century transformation. So we need to take it as an opportunity. And Nissan has a DNA of 2 things that others don't dare to do. So we will keep on taking on the challenge. I'm sure -- I'm sorry about the vague answer. But considering the new era of case, I am sure that new corporate value will be in question and new players will be emerging in the industry. In these circumstances, Nissan intends to deliver solid corporate value. And that's what we focus on. That's my answer.
Thank you very much. We are running out of time, but there are some more people who are raising hands. So let me take one more. One more question.
Yukinobu, Toyo Keizai. Back to semiconductors, to the extent you can share with us on unit basis, you haven't disclosed the number, but with the semiconductor shortage, where have you seen decline in volume? Is there anything unique to Nissan, where you were particularly hit by the semiconductor shortage? Sir, please let us know.
I think Nissan is part of the global shortage as other OEMs, having said that, as I said before, Nissan has got strength of commonization of Tier 2, Tier 3 parts. Maybe there are some specific semiconductors and the chips where Nissan has got advantage because of to we have the full exclusivity. Apart from that, I think Nissan is part of the global shortage.
Thank you so much. Because we have the upcoming schedule, we would like to end the Q&A session. Last but not least, I would like to ask Mr. Uchida to make the very last comment.
Yes, thank you for all your questions. We -- as I said last time, in November, we recognized that we are still in the negative. We are realistic, well aware of foreseeable risks and are determined to successfully execute Nissan NEXT business transformation plan. Thank you for your ongoing support. Thank you.
With this, we would like to conclude the session for the earnings announcement for fiscal year 2020 Q3. Thank you for attending, and good day.