Editor’s note: This article is from Krypton 36 “Future Automotive Daily” (micro-channel public number ID: auto-time), Author: Terence Lee Nan.Author | Li Zinan
Edit | Wu Yan
More than a month after the famous former chairman Carlos Ghosn absconded, Nissan’s new CEO Makoto Uchida was also in a dilemma.
In the face of bleak performance and the accusations of shareholders on February 18, Uchida Makoto, who has been in office for less than three months, issued a military order at the shareholders’ meeting. “If I can’t reverse the decline of Nissan, I am willing to accept the dismissal.”He urged shareholders to be patient and promised a plan by May to get Nissan back from a shaky situation.
Fifteen months after “breaking up” with Ghosn, Nissan, which had expected to “open a new page”, failed to recover as expected.
The third quarter 2019 financial report released on February 13th showed that Nissan lost 26 billion yen (about 1.66 billion yuan) during the reporting period, which was its first quarterly loss in 11 years.In addition, affected by the new coronavirus pneumonia epidemic, Nissan’s multiple factories in China and Japan’s Kyushu Island are still suspended.Nissan expects global sales of 5.05 million units in 2020, which will be its weakest sales performance since 2013.
There is not much time left for Uchida, and the situation is more difficult than expected.Nissan, which lost its powerful leader, is in desperate need of a hero to save it.
Worst performance in 10 years
Makoto Uchida, who has been in office for less than three months, failed to win shareholder trust with amazing performance.
The financial report conference held on February 13th revealed the sluggish status quo of Nissan.In the first three quarters of fiscal 2019, Nissan’s total revenue was 757.3 billion yen, a decline of 12.5% year-on-year; operating profit was 54.3 billion yen, a decrease of 82.7% year-on-year; net profit plummeted 87.6% to 39.3 billion yen, equivalent to RMB 2.479 billionyuan.
In many regional markets around the world, Nissan has steadily failed.
From April to December 2019, Nissan sold 3.697 million new vehicles worldwide, down 8.1% year-on-year; annual sales were 5.176 million, down 6.2% year-on-year.
Among them, Nissan’s domestic sales in Japan were only 381,000 units, a year-on-year decrease of 6.9%; in the United States and European markets, sales were 980,000 and 395,000 units, down 9.1% and 16.2%, respectively.In Asia and Oceania, the Middle East and Africa markets, Nissan sales declined by 11.5%, with 547,000 units sold.
The troubled Nissan car is inevitable.Nissan’s CEO Makoto Uchida admitted, “Although we managed to keep our sales in China, the decline in sales in the United States and Europe has had a huge impact.”
Makoto Uchida Source: Wikipedia
After the earnings report, Nissan’s stock price quickly fell to its lowest level since July 2009, a drop of 7.5%.After falling 22% and 28% in 2018 and 2019, respectively, Nissan’s stock price has continued to fall by about 11% since 2020.
In desperation, Nissan had to start a new round of cost reduction programs.Uchida explained: “I can reduce fixed cost expenses, but sales are really lower than expected. I have started to reduce further fixed cost expenses.”
The global recovery plan implemented since July 2019 requires Nissan to increase revenue by at least 480 billion yen by 2023.The plan includes reducing car models, accessories and interiors, cutting marketing budgets, and operations at US and European headquarters.
According to Reuters, on the basis of 4,800 layoffs in May 2019, the number of Nissan presidents will exceed 10,000, and the US and European headquarters will be the hardest hit by the layoffs.In addition, Nissan plans to reduce advertising and marketing expenses globally and close two factories.
In addition, the negative impact of the Ghosn incident on Nissan is still expanding, and the two sides are still in a stalemate.
On February 12, Nissan Motors announced that it had formally filed a civil lawsuit against Ghosn with the Yokohama District Court in Japan, claiming 10 billion yen (about RMB 630 million).Before Nissan countered, Ghosn also filed a lawsuit against Nissan and Mitsubishi in the Netherlands, claiming 15 million euros (about 110 million yuan).
As Ghosn fled from Japan to Lebanon, Nissan became a laughing stock, and its corporate image plummeted.With no extradition treaty between Japan and Lebanon, Nissan’s anticipation of Ghosn’s trial may be long-term.
Uchida is in crisis of trust
Nissan’s deteriorating performance has left Uchida in a completely embarrassing situation.
On February 15, Reuters quoted three people familiar with the matter as saying that Nissan’s new CEO Makoto Uchida is actually in a “trial period” and he has months to prove whether he can bring Nissan back to life.”If Nissan’s situation continues to deteriorate, he may be swept out.”
The person familiar with the matter revealed that although Uchida Makoto was appointed as CEO, Nissan has disputed its appointment internally, and some members of the board of directors have strongly recommended Nissan’s former COO Guan Run as CEO.In a CEO nomination committee composed of six members within Nissan, Guan Run had received 3 votes of support, but due to Renault’s influence, Makoto Uchida defeated Guan Run in the second round of voting.
By mid-January, some members of the board of directors began to “regret” Mr. Uchida’s appointment.Although Uchida Makoto said in his inauguration that Nissan will have a new beginning, he has not publicly elaborated on the strategic details of the revival of Nissan.
In addition, since the appointment of the leadership team consisting of Makoto Uchida, Guanrun and Gupta, they have not been united into a team.”These appointments did not immediately create cohesion and did not produce a strong chemical reaction,” a source told Reuters.
When Uchida took office, he took a cautious stance.In November 2019, Guan Run’s team had suggested that Nissan implement more aggressive measures to cut costs significantly, but these proposals were not implemented in time after Mr. Uchida took office.Less than a month after Mr. Uchida took office, Guan Run, a core member of the leadership, announced his departure from Nissan.
At the shareholders’ meeting on February 18, Nissan’s internal dissatisfaction with Makoto Uchida and management began to erupt.Shareholders who lost trust in Uchida demanded that it cut executive pay and offer bounties to bring Ghosn back to Japan to save Nissan’s deteriorating corporate image as Ghosn fled to Japan.
Angry shareholders questioned the ability of Uchida and other executives to lead Nissan’s recovery and expressed dissatisfaction with the departure of former CEO Hiroto Nishikawa.
Some shareholders have asked Uchida to announce a detailed reform plan: “We want to know what Nissan’s recovery plan is like. Now that the company’s stock price is falling every day, Nissan has not taken clear measures.” A Nissan auto shareholder was accepting Reuters”If the situation continues to deteriorate, most of us have reason to believe that Ghosn is the better choice for Nissan.”
Nissan Building in Yokohama, Japan Source: Nissan Official
Facing pressure from shareholders, Makoto Uchida said he would formulate a plan by May to restore Nissan from its shaky situation and restructure the company.If it is impossible to reverse the current slump, Uchida will accept his dismissal.
But he is facing a messy and shaky Nissan with internal management.
Mediocrity and inaction are wrong
The Ghosn incident is like a “Pandora’s Box”, unveiling a series of hidden dangers for Nissan and opening the darkest era for the car giant in 10 years.
From poor cost control to weak internal management to subtle tensions with Renault, these issues are like time bombs that have been detonated after Ghosn’s arrest.
Source of Ghosn after fleeing Lebanon: screenshot of Ghosn conference video
Since Ghosn’s arrest, Nissan ’s profits have plummeted, sales have fallen sharply, its stock price has evaporated by more than a third, and more than 12,000 employees have been laid off.After fleeing Lebanon, Ghosn even asserted at a press conference that “Nissan will go bankrupt within two years.”
In October 2019, Makoto Uchida once told employees on the company’s intranet: “Nissan is on the right path to recovery, although this may be a gradual process.” Now, Uchida’s promise has not been fulfilled.Not stopped.
The worse news is that Uchida’s rescue operation has not yet begun.At the shareholders’ meeting on February 18, Makoto Uchida said that Nissan is considering the possibility of speeding up the existing restructuring plan and implementing additional measures.But he added that the company will not provide details of these additional measures until May.
In the Nissan revival plan, Makoto Uchida shoulders almost all of Nissan’s bets.However, in the current situation, Uchida’s rescue of Nissan has not caught up with the speed of Nissan’s fall.
Koji Endo, an analyst at Japanese securities company SBI Securities Co., believes that Nissan’s global business still needs to be reorganized, and new car development needs to be accelerated.At the same time, Nissan’s previous efforts to improve the company’s profitability have not been effective, and Uchida still has a lot to do.In addition, for Uchida Makoto, how to stabilize and balance the relationship between Renault-Nissan-Mitsubishi Alliance is also a top priority.
Some Uchida supporters justified him: “The company’s current woes are not caused by Uchida, but by global expansion led by Ghosn and former CEO Hiroto Nishikawa.”
Makoto Uchida may be right.But for today’s Nissan, mediocrity and inaction are wrong.What Nissan really needs is a hero like Ghosn who turned the tide.