| EIJI IMAI Senior Vice President QUALITY The Quest for Improved Quality “Quality is a crucial factor in Nissan’s success. Along with trust, familiarity and differentiation, it is one of the ways we express our brand. Quality builds the trust of our customers and stakeholders, so it is also a major element in promoting the brand.  Quality was a major issue for us in 2004. We were unable to reach the global goals we set because a great deal of time was spent addressing issues that arose, particularly in the U.S. The good news is that in all our newly launched vehicles, including those from the U.S., we are seeing radically better quality. This is a direct result of implementing a global quality management system. While such positive outcomes are welcome, we must continue to upgrade the quality of Nissan automobiles.  To be frank, the quality programs of the past no longer suit our organization. During the NISSAN 180 period, we redefined the Nissan Product Quality Policy and reorganized its elements. The new Quality Policy sets three goals. First, our product quality must be in the top three among automakers. Second, we will establish uniform global quality standards; this is not a single-fix solution, however, since each region may have its own requirements. And third, we will implement and continuously improve  the Nissan Quality Assurance Way, a global quality assurance system. The Quality Policy is a top-down process, whereas the Assurance Way is bottom up. The Assurance Way can be summarized as follows: First, we will set clear, reasonable, understandable targets for each activity, and review milestones along  the way.  Second, because problems are usually discovered late in the process, we want to front-load the problem-discovery process by moving it further upstream. We must predict potential problems at the engineering stage, at the supplier level, and in design models. We realize, of course, that problems will still be found during the later stages. Therefore, feedback must be submitted quickly.  The other three elements of the Way are to reinforce a strong sense of responsibility, standardize our engineering process to establish a higher level of quality, and seek continuous improvement. These are all basic but essential. One other new means of ensuring quality we’ve established is the Project Quality Director or “PQD” system. I’ve assigned six PQDs to each of our vehicle lines, including overseas projects. The PQDs establish quality targets at the initial stages of development and at certain milestones. They also conduct quality clinic drives and test pre-production models.  In the end, quality assurance involves more than just reacting to problems; we need to prevent them from ever occurring. To accomplish that, we test out countless possible scenarios, including collecting automotive parts that have had quality problems and installing them on vehicles. This allows us to really understand the problem. We also examine used cars at several stages to evaluate how well our parts have endured under typical conditions such as sunlight and acid rain, and in comparison to those of the competition.  Although we have standards and criteria for these potential concerns, we must assess actual trends and identify our weak points if we are going to meet customer expectations, which are getting higher all the time. To fulfill our commitments on quality, we need to examine every product throughout its entire life cycle. We must do this on a global basis, and better than before.” OUR WORK Nissan Annual Report 2004 49 The third way is to take integration to a higher level.  A vehicle consists of thousands of parts, so integration is needed between various departments, such as design and engineering and engineering and production. 