Nissan Motor

The origin of the name Datsun can be traced back to 1911, when an early Japanese automaker named Masujiro Hashimoto produced his first car, a small 10 hp passenger model. The car was named DAT, after the initials of Hashimoto's three backers. Hashimoto's company, Kwaishinsha, later brought out a sports car it called son of DAT or Datson, which was eventually changed to Datsun. The firm then turned its attention to making trucks, mainly for the military.

Kwaishinsha, which took the name DAT Motors in 1925, merged the following year with another struggling car maker called Jitsuyo Jidosha Seizo. Jitsuyo had been founded in 1919 by Kubota Ironworks in order to develop a motorized alternative to the rickshaw. Jitsuyo's operations were based on the designs of an American engineer, William R. Gorham, who was living in Tokyo. The combined operation spent some years making small quantities of trucks, mainly for the military, but in 1932 it introduced a new Datsun automobile.

The following year the rights to the Datsun line and the Osaka factory that produced the cars were taken over by Yoshisuke Aikawa, an engineer and entrepreneur who controlled the Tobata Casting company. In 1933 Aikawa combined the Datsun operations with the auto parts business of Tobata to create a company that in 1934 was given the name Nissan Motor. The term Nissan, a shortened form of Nippon Sangyo (Japan Industries), was the name of the zaibatsu conglomerate controlled by Aikawa.

Nissan Motor initially made auto components for the Japanese subsidiaries of Ford and General Motors, but Aikawa was convinced the company could succeed by producing small cars--a product in which the big U.S. automakers had not the slightest interest at the time--as well as trucks. To help in the effort he purchased machinery, truck designs, and technology from the U.S. company Graham-Paige as well as equipment from other American suppliers. Nissan Motor began producing trucks in 1941, and found an eager customer in the military establishment.

During the Second World War, Nissan Motor expanded to include the manufacture of military aircraft engines. After Japan's defeat, Aikawa's conglomerate, which had grown to include the Hitachi group, was dissolved along with the other zaibatsu. Nissan Motor resumed operations on its own with new management, most of its previous executives having been purged by U.S. occupation authorities. The presidency fell to Taiichi Minoura, a former reporter with little auto industry experience. He was aided by Katsuji Kawamata, a financial specialist sent in by the Industrial Bank of Japan.

The outbreak of the Korean War was a boon to Nissan, as it was to many Japanese companies. As part of a strategy to make Japan a bulwark against Communism in Asia, the U.S. government relied on Japanese manufacturers for much of the materiel used in the war. Once the military orders tailed off, Nissan again turned to a Western company for help in building its auto operations. This time the partner was Britain's Austin Motor, which in 1952 formed a technology-sharing agreement with Nissan and licensed the Japanese company to assemble Austins for the domestic market.

Despite the foreign help, Nissan began to fall behind its rival Toyota, which was much more aggressive in establishing a dealer network. Nonetheless, Nissan began preparing for a resumption of the export activity it had engaged in during the years preceding World War II. In 1960 Nissan Motor Corp. of America was established, though the company's cars at the time were not powerful enough to sustain high speeds over long distances—a type of driving more common in the United States than in cramped Japan. Over the next few years, the company established its first overseas manufacturing operations in Mexico and Peru.

Nissan entered a period of growth in the mid-1960s with the introduction of the Sunny in Japan and the merger in 1966 with Prince Motor Co.. That merger led to the creation of the Nissan Prince Royal, the first domestically produced limousine to be used by Japan's imperial family. At the same time, the company started to become a detectable presence in the U.S. import market. That penetration became more significant in the early 1970s with the introduction of the Datsun 510 line, which included four-door sedans and station wagons, and the 240-Z sports car.

These cars and their successor models helped propel Nissan to the top tier of importers into the United States. The company, along with all the other automakers, initially suffered sharp drops in sales amid the oil crisis, but after the initial shocks, small imported cars like Nissan's captured a larger share of the market. Toyota moved further ahead of Nissan in U.S. sales, though by 1979 Nissan was selling more than 400,000 cars a year in that market.

Nissan enhanced its position in the U.S. market by following Honda in opening a U.S. assembly operation. The company hired former Ford manufacturing executive Marvin Runyon, and spent more than $600 million to build a state-of-the-art factory 18 miles outside Nashville in Smyrna, Tennessee. The plant, which started making pickup trucks in 1983, and then added cars and later engines, was held up as a model of the modern workplace. Yet the expense of starting up the facility made it less profitable than the company had hoped. Costs were also increased by the company's decision to change the name of its products in the U.S. market from Datsun to Nissan.

Nissan, meanwhile, was experiencing problems outside the United States as well. It continued to lose ground to Toyota in the Japanese market, and export sales were depressed by the strong yen. The result was a squeeze on profits. In the first half of its 1987 fiscal year, Nissan reported its first operating loss since 1951.

In the late 1980s Nissan attempted a comeback by redesigning its product line, changing the boxy contours of the Maxima, for instance, to sleek, aerodynamic lines. The company also moved into the luxury segment of the market, creating a new line, Infiniti, which was promoted with a Zen-like advertising campaign that showed scenes of nature rather than of the product. After a slow start the Infiniti began to do well in the U.S. market, but overall Nissan was not able to break out of its slump. The company continued to struggle through most of the 1990s.

Nissan looked for salvation in a partnership with France’s Renault, which in 1999 paid about $5.4 billion for a 37 percent stake in the Japanese automaker. Renault used its position to install Carlos Ghosn as Nissan’s chief operating office (and president as well in 2000). Ghosn embarked on a massive cost-cutting effort, including substantial job eliminations in the company’s Japanese operations. At the same time, he expanded Nissan’s manufacturing presence in the United States with the announcement in 2000 of a $930 million assembly plant in Mississippi. He also purchased a 50 percent stake in Chinese automaker Dongfeng Motor, and also invested in countries including Romania, India, and Egypt.

Ghosn’s moves paid off for the company and for him personally. In 2004 Business Week lauded him as “the hottest automotive talent on the planet right now,” and in 2005 he was named chief executive of both Nissan and Renault. Nissan’s resurgence stalled in 2007, and the company offered buyouts to reduce its workforce in the United States and Japan. Now Nissan is counting on its line of small, inexpensive cars, including the Cube, to form the basis for a new rebound, but the company has been hard-hit by the global recession.