Saikawa under siege from within as Nissan profit sinks
Carlos Ghosn’s arrest threw Nissan Motor Co. into a corporate tailspin with allegations of self-dealing, profligate spending and filing false statements. Now the automaker’s profits are falling off a cliff, and successor Hiroto Saikawa may go down with them.
Troubled by slumping US sales, aging models and a product cycle that’s out of sync, the Yokohama-based company is on track to announce on Tuesday its lowest annual operating profit in a decade, raising the possibility of a dividend cut. The outlook for the current fiscal year to March 2020 probably won’t be any more promising.
Chief executive officer (CEO) Saikawa has yet to announce a turnaround plan since the arrest of former chairman Ghosn in November, and people familiar with the matter say there’s internal strife over whether he’s the right executive to fix Nissan. Alliance partner Renault SA may not look too favourably on Saikawa’s reappointment if he continues to oppose a merger said to be backed by its own chairman Jean-Dominique Senard, who is also a Nissan director.
In addition, alliance partner said it would block Saikawa’s reappointment if he didn’t agree to a merger — a request made by Renault’s new chairman that Saikawa batted away, the Yomiuri newspaper reported last month.
“A new management team and strategy may be the answer,” said Michael Dean, a Bloomberg Intelligence analyst.
“We do not comment on rumors or speculation,” said Nicholas Maxfield, a Nissan spokesman. “The company’s focus is on stabilizing operations and strengthening its management structure, while addressing the weaknesses in governance that enabled this misconduct.”
The surprise jailing of Ghosn, who led both carmakers for two decades, exposed rifts over control and decision-making. Since then, Ghosn was released and detained once again. Currently out on bail, Ghosn has denied all charges against him, saying his arrest was due to a “dirty game” played by some Nissan executives. He is now preparing for his trial, which may start later this year or next year.
A pending litmus test for Saikawa’s job security will come next month, when Nissan’s directors are set to formally adopt new corporate governance rules that include creating a more independent board. In an extraordinary shareholders’ meeting held last month to remove Ghosn from the board, Saikawa was peppered with questions as to why he wasn’t stepping down to take responsibility for Nissan’s poor governance.
Saikawa said there are many ways to take responsibility and he believed the right thing for him to do now is to help Nissan rebuild, signaling his intention to stay on. Even so, Saikawa needs Renault’s vote from its 43% stake to back his reappointment, especially given that roughly half of minority shareholders have voted against his appointment since 2017.