Nissan Plans $3,000 Car (Only In India)

Nissan Motors CEO Carlos Ghosn makes a speech during an opening ceremony of Nissan's new Advanced Technology Center in Atsugi city, Kanagawa, Japan, in this May 15, 2007 file photo.
AP Photo/Katsumi Kasahara
Nissan Chief Executive Carlos Ghosn told shareholders Wednesday that the Japanese automaker's board members will forego their bonus pay to take responsibility for poor performance.

Ghosn acknowledged at a hall packed with more than 2,100 shareholders, a record attendance for Nissan, in Yokohama, south of Tokyo, that the company had not met its targets for fiscal 2006.

"We are taking our responsibility seriously," he said.

In the fiscal year ended March, Tokyo-based Nissan Motor Co. marked its first profit drop in seven years — the first time earnings have slid under the turnaround efforts led by Ghosn.

Ghosn told reporters after the meeting that Nissan was not in talks with any automaker now about expanding the alliance it already has with Renault SA of France.

"Today, our shareholders, both from Nissan and Renault, consider that extending the alliance is more a risk than an opportunity," he said.

He also said he had no interest in buying the Jaguar and Land Rover luxury European brands that Ford Motor Co. has expressed interest in selling.

"Did you see the price of the brands?" he said. "How are you going to create the returns on this kind of investment?"

Earlier at the meeting, Ghosn tried to assure shareholders by saying that Nissan was investing aggressively in the future, including opening plants in emerging markets, introducing new models, developing green technology and building brand image.

One of the emerging markets Ghosn is targeting, is India.

He said Wednesday the Japanese automaker was working on a super-cheap $3,000 car for the Indian market, but the date for its sale was still undecided.

Ghosn said the need for such a vehicle is apparent for the Indian market and because a rival has already announced that one was coming.

Nissan Motor Co. will work on the car with its French alliance partner Renault SA and a local Indian partner, Ghosn said.

"You don't want to be surprised when the $3,000 car arrives in the market," he told reporters. "We are gathering a lot of information."

Renault, also headed by Ghosn, has already said it is considering creating a cheaper version of its no-frills Logan sedan for about $3,000 in India.

Renault began selling the Logan in India earlier this year through a joint venture with local automaker Mahindra & Mahindra, but it's priced in a range of $9,700-$12,400.

As competition heats up for cheap cars in India, domestic automaker Tata Motors Ltd. has announced that it plans to make a car that will sell for 100,000 rupees, or $2,500.

India offers low-cost manufacturing and suppliers that makes it the best place to produce cheap cars, and Indian consumers will likely buy such cars, Ghosn said.

It would be "a threat" to Nissan if it didn't work on a $3,000 car, he said.

"2007 will be a better year for Nissan," he said at the shareholder meeting.

Nissan had marked a dramatic turnaround from near bankruptcy under the Brazilian-born Ghosn, who was sent in 1999 by Renault, which owns 44 percent of Nissan. But recently its sales have been sliding, and it has slipped into third place in Japan behind Toyota and Honda.

Most shareholders were quietly attentive, but a few aggressively questioned Ghosn, even heckling him from the floor at times. Such behavior is not particularly unusual at Japanese shareholders' meetings.

Grilled with questions about whether Nissan was falling behind in product quality and ecological technology, Ghosn told shareholders he was confident that better times were ahead, and that the problems were temporary.

  • Tucker Reals

    Tucker Reals is the CBSNews.com foreign editor, based at the CBS News London bureau.