May 22, 2012
Carlos Ghosn on Infiniti’s new Hong Kong headquarters
As Infiniti opens its new global headquarters in Hong Kong, CEO Carlos Ghosn discusses reasons for the relocation and the outlook for the China auto market.
Q1. Why locate Infiniti in Hong Kong?
Infiniti is going to be one of the main pillars of growth during Power 88. Our intention is to bring Infiniti towards 10% of all market share in the luxury market. We’re today around 3% so we have tremendous growth to bring and to organize. For this, we need to focus on Infiniti and we need to make sure that the people who work for Infiniti are, in a certain way, one team, in one location and absolutely conscious of what they have to do and be very well coordinated.
So, we thought we need to bring the team together—that’s what we’re doing—and, second, in a certain way, detach them from the big brother that is Nissan, which fortunately is growing a lot. And we need to bring them near a market which is a very important market for Infiniti, so we decided to bring them to Hong Kong.
Why? Because Hong Kong is the door to China. It’s also a place where you can easily connect with the southeast of Asia, so that’s why we said let’s get out of Tokyo, let’s go to Hong Kong, put the whole team together so we can reinforce the identity of the brand and the people working for the brand and, particularly, be very near and interacting with the main promising market for Infiniti, which is China and, particularly, in a place which has something specific: As you know, the Hong Kong market is the market with the highest percentage of luxury cars in the world. Half of the cars sold here are luxury.
Q2. As well as the move to HK, Infiniti is also internationalizing production with the JX being built in the U.S. and plans to make cars in China and Europe. What will be the impact of a truly global Infiniti?
To pursue the 10% market share for Infiniti, this means we’re going to move from something around 150,000 cars sold last year to something around 500,000 within the next four to five years.
In order to do that, it’s very difficult to build all those cars in Japan. We’re already taking a huge risk with the currency – the yen being extremely strong, compared to the renminbi, extremely strong compared to the dollar, extremely strong compared to the euro. I don’t think we have a chance to be successful with the Infiniti brand if we are dependent on one currency in terms of cost of production. So the expansion of the brand in terms of production is going to incorporate capacity in the United States, incorporate capacity in China and incorporate capacity in Europe.
It cannot be understood that we are taking Infiniti away from Japan. Not at all. Tochigi is going to continue to be a plant for Infiniti and a very important plant for Infiniti.
We just want to make sure that, particularly facing our German competitors, that we have a footprint in terms of production, which is not very far from theirs. They produce in Europe, we produce in Japan. They produce in China, then we produce in China. They produce in the United States, then we are going to produce in the United States so we can be much more competitive and not bear the problems and the weight of having a very strong currency weighing on the development of the brand.
Q3. Finally, overall auto sales growth in China has steadied recently from the stellar growth of previous years. What’s your outlook?
I think the level of growth in the Chinese market is very reasonable today. We’re still considering that 5-6% growth for passenger cars this years is in the very center of forecasts.
Let’s not forget that we’re talking about a huge market so 6% or 7% growth in a total market of more than 17 million – we’re talking about an additional one million cars. So it’s not something which is very small.
We, frankly, are very comfortable with a 5% or 6% increase in the market because it allows us to do a much better job in terms of growing our presence and, at the same time, cultivating a great customer experience at the level of the retail network, increasing capacity of production where we can do it in a way which is very cost effective, very investment effective and with extreme care in terms of quality and reliability.
So, frankly, I would say that if we can continue on the trend of 5-6% increase, we’ll be extremely happy. But I don’t think it’s going to happen. I think the growth is going to continue to be higher than this. We’ve met a lot of people who are knowledgeable about the Chinese market. They’re more on a trend of 8% growth for the next five years. I’m not worried about China.