This paper clarifies how a design rule of modular product is formed, which is one of the remaining issues in product modularity research, through the case of CMF development process at Nissan. Three findings are delivered. First, a design rule must be explicitly defined before any kind of product design begins and this order should be strictly observed. Second, quality of a design rule is influenced not only by technical capability but largely by how much of the prerequisites are cleared such as requirements from the market. Third, thus, formation of a design rule is a strategic issue that requires involvement of senior managers as well as engineers. In these three aspects, the development process of a modular product differs from the conventional development process.