Nissan's Bad Year Greenlit for a Sequel

Matt Posky
by Matt Posky
nissans bad year greenlit for a sequel

Nissan is bracing for a bad year. On Tuesday, the automaker held a press conference at its headquarters in Yokohama, Japan, to tell the world that it’s forecasting a 28-percent decline in operating profit this year. While that sounds bad, it comes on the heels of the company’s financial results for the 12-month period ending March 31st, 2019 — which was a dumpster fire.

Operating profit plunged 45 percent to 318 billion yen ($2.9 billion), while revenue fell 3 percent to about 11.6 trillion yen ($105 billion). Vehicle sales were down 4.4 percent. “Today we have hit rock bottom,” CEO Hiroto Saikawa told the press, suggesting the company could rebound in a few years.

Saikawa attributes much of the automotive firm’s current woes to the “negative legacy of our old leader” Carlos Ghosn, whose reputation was defiled by the findings of an internal investigation. The ousted chairman claims the probe, and the allegations stemming from it, were a corporate coup set up to remove him from power and halt a potential merger between Nissan and alliance partner Renault.

Ironically, Ghosn was universally championed as the man who saved Nissan from the brink of disaster in 2002. He’s now under constant supervision by Japanese authorities while awaiting trial.

However, as good as the company falling apart in his absence makes things look for Ghosn, some of Nissan’s current issues are the direct result of his decisions. During his tenure, Ghosn set wildly aggressive sales targets that forced the company to become largely dependent on incentivizing in the United States — making for razor-thin margins. While not much of a concern when sales were strong, the brand’s U.S. volume fell by 9.3 percent last year.

Another ghost that has come back to haunt Nissan is the aforementioned merger push. During the conference, Saikawa addressed the ongoing amalgamation concerns. “[Renault chairman Jean-Dominique Senard] has one idea in mind, which is integration or merger,” he said. “What we’ve told Mr. Senard is this is not the right timing to discuss this matter,” noting that he and other Japanese executives have consistently been opposed to the idea.

Nissan’s dismal fiscal performance and the CEO’s ominous predictions led reporters to ask whether Saikawa would step down — something he planned to do prior to Ghosn’s arrest, possibly due to rumors that he was to be fired by the former chairman. Saikawa reneged on that promise after Ghosn’s November arrest. According to Reuters, he was noncommittal at the press conference.

“Timing is a matter I need to decide,” he said, adding that he would step down “at the appropriate time” and had nothing further to say on the matter.

[Image: Anton Watman/Shutterstock]

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  • Cbrworm Cbrworm on May 15, 2019

    Nissan (and Mitsubishi) used to be only slightly worse than their rivals. They were not as good as Toyota and Honda, but they weren't far behind. It seems that Mitsubishi fell off a pretty steep cliff during or after the DSM project, followed by Nissan - probably due largely to the CVT. I've owned a bunch of Nissan and Infiniti cars and trucks, and they have all served me very well. I've also owned a number of Toyota, Lexus, Mitsubishi, BMW, Mercedes, and occasionally domestic vehicles - so I have examples for comparison. I still get Nissans as rentals fairly frequently and I still enjoy the comfort and relative performance of the Maxima and even the Altima. I get the feeling that they are underappreciated. I avoid owning them due to CVT reliability concerns, but I don't even know if that is still an issue. All of that to say, as a consumer, I don't buy new Nissans any longer and it isn't due to Ghosn's legal status, it is due to mostly to the CVT and partially due to percieved quality issues that I didn't see prior to Ghosn's salvation of Nissan.

  • Duncanator Duncanator on May 15, 2019

    Get rid of the XTerra and let the Frontier rot as sales of trucks and SUV's blow up. Why buy a new Frontier when you can get a 2010, which is practically the same vehicle?

  • Keith Maybe my market's different. but 4.5k whack. Plus mods like his are just donations for the next owner. I'd consider driving it as a fun but practical yet disposable work/airport car if it was priced right. Some VAG's (yep, even Audis) are capable, long lasting reliable cars despite what the haters preach. I can't lie I've done the same as this guy: I had a decently clean 4 Runner V8 with about the same miles- I put it up for sale around the same price as the lower mile examples. I heard crickets chirp until I dropped the price. Folks just don't want NYC cab miles.
  • Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
  • Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
  • Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
  • William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.