Clock ticking for Nissan boss to show he has a plan
Makoto Uchida doesn’t have time to work his way into his job. The new CEO of Nissan Motor Co is effectively on probation and has a matter of months to show he can revive the ailing automaker, say sources familiar with the thinking of some on the company’s board.
The mission: the new boss must prove to the board he can accelerate cost-cutting and rebuild profits at the 86-year-old Japanese giant, and that he has the right strategy to repair its partnership with the French automaker Renault, the three sources told Reuters.
The pressure intensified last month when Nissan, which has had a year of turmoil since the arrest and sacking of long-time leader Carlos Ghosn, posted its first quarterly net loss in nearly a decade and slashed its annual profit forecast.
Management subsequently faced a barrage of criticism at an extraordinary shareholders’ meeting on Feb 18.
“You are just making losses on slowing sales with an aged product portfolio. What are your plans for new models?” one shareholder asked executives during the meeting.
An assessment of Uchida’s efforts and a decision on his future would likely be made toward the middle of the year, said one of the people familiar with the intentions of some on Nissan’s 10-member board.
“Probation is more or less the right way to describe the situation Uchida is faced with, if not more serious,” the source said.
“In the worst-case scenario he could be shown the door.”
Uchida declined to comment on the claims, referring all queries from Reuters to Nissan communications staff. They said suggestions that Uchida faced uncertain circumstances had “no factual basis”.
“Effectively or otherwise, Uchida is absolutely not on probation,” a Yokohama-based spokesman added. “There does not exist such a concept or system within Nissan to put a CEO on probation. He is the CEO.”
Some supporters also stressed that Uchida has only been in the top job for little more than two months, while Nissan’s business has been in decline since 2017. Executives and analysts have previously said the company’s current woes are not of Uchida’s making, but are the fallout from an aggressive and poorly executed global expansion under Ghosn and Uchida’s predecessor, Hiroto Saikawa.
“Nissan is on the right path for recovery … although it might be a gradual process,” Uchida, formerly Nissan’s China chief, said in a video message to employees in October, shortly after being named CEO.
He billed himself and his senior leaders — chief operating officer Ashwani Gupta and vice-COO Jun Seki — as a tight “one team” that could deliver a bright new dawn.
The “one team” hasn’t shown much unity, though. Seki resigned in late December and joined the electric motor producer Nidec Corp as president.
Gupta, meanwhile, has griped privately to colleagues about having a dysfunctional working relationship with the new CEO, according to two of the sources, but he is committed to working with Uchida to turn Nissan around.
One source said the board would not brook internal squabbles or procrastination on the executive team: “The biggest problem is nothing getting done, at a time when we need to take decisive actions.”
Nissan, Japan’s second-biggest automaker after Toyota, faces an array of structural woes, from high fixed costs to weak management to a strained partnership with Renault, which began unravelling after Ghosn’s arrest in late 2018.
The problems come at a pivotal time when Nissan and other automakers are attempting to come to grips with a major, and costly, technological shift toward electric and self-driving vehicles.
The carmaker posted a net loss of ¥26.1 billion (US$238 million) for the October-December third quarter, compared with a net profit of ¥70.4 billion a year earlier. It has cut its annual operating profit forecast by 43% to 85 billion yen.
Though Nissan expects to report a small profit for the financial year ending in March, some executives are worried it could post a loss, especially since the forecast does not take into account the impact on sales in China and beyond from the spreading coronavirus outbreak.
At an earnings media conference on April 20, Uchida said that Nissan was looking at the possibility of accelerating existing restructuring plans, as well as additional measures that could be announced in May.
Uchida replaced Saikawa, who resigned in September after admitting to being improperly overpaid. His appointment was contentious, with some members of the board’s sixstrong nomination committee pushing for Seki or Gupta, according to two of the sources.
Seki, in fact, received three first-choice votes, leading to another round where second preferences were taken into account. Uchida received five second-choice votes so he won the job, the people said.
By mid-January, however, some board members were starting to regret the decision, said the sources. While Uchida had touted a fresh start, he has still not publicly spelled out specifics of his strategy.
Some directors complained that he was even sitting on some of the turnaround measures agreed on by a Sekiled team before he took charge, the sources said.
They included effectively pulling out of Indonesia, where the group’s market share fell below 2% in 2018. Instead, the company would ask partner Mitsubishi, an SUV powerhouse in Southeast Asia, to contract-manufacture Nissan cars and help market them in Indonesia, said a source close to the turnaround team.
When Uchida became CEO, however, he struck a cautious stance and made no decision on the proposed pullout.
Seki’s team also suggested Nissan go into a more intense “crisis mode”, significantly stepping up spending cuts, including sizeable reductions in yearend bonuses for top executives, said the source, adding that the proposals had not been implemented under Uchida.