By on July 6, 2020

Nissan CEO Makoto Uchida attempted to smooth things over with investors last week by going over his company’s new recovery plan in great detail. As you undoubtedly know by now, the automaker found itself in a less than blissful situation following an ugly internal power struggle that highlighted corporate corruption and a business strategy that seemed like a liability without ideal economic circumstances and the man who penned it running the show.

With its share price already suppressed by worsening sales performance and assumed “management issues” with alliance partner Renault, the internal scandal kicked off by the arrest of former chairman Carlos Ghosn November 2018 is what really sent Nissan’s stock into a tailspin. Shares have lost more than half their value since the incident.

This placed Uchida in the undesirable position of having to explain what went wrong and how to fix it. In the past, Uchida said he’d happily be fired if he can’t turn things around, though that’s usually what happens to CEOs who can’t deliver (or need to be scapegoated and sacrificed on the alter of commerce by their board). Based on comments made at the company’s most recent shareholder meeting, Uchida seems to understand how things work.

“I said, ‘If Nissan’s performance does not improve, please fire me. Please dismiss me,’ ” he reminded the crowd on June 29th. “That’s what I said. And this policy remains unchanged.” 

Japanese speakers reported investors were more irritable than usual this time. Nissan shareholders had already been vocal regarding concerns of French influence, with many insisting Nissan is a Japanese company and should be ran as such. However, some are now looking back at Ghosn’s era of profitability with rose-tinted glasses. His often repeated claim that he was on the receiving end of a corporate coup supported by the Japanese government has also gained traction, with at last one investor openly addressing the matter during the meeting. Considering that the conspiracy claims only look more credible over time, this was hardly a surprise.

According to Automotive News, Motoo Nagai, head of Nissan’s auditing committee, denied there was any plot to remove Ghosn. “I know that in the media they have talked about this being a conspiracy. But there is no fact whatsoever to this argument,” Nagai said, adding that an independent external task force and law firm Nissan hired to investigate the matter both uncovered misconduct.

We’ve also seen other high-ranking officials at Nissan dismiss themselves over similar claims of financial malfeasance. Some involved in Ghosn’s supposedly planned ousting have been given diminished roles within the company, but Uchida spent the brunt of the meeting trying to prove that the recovery plan, dubbed Nissan Next, is a good one — and is moving forward with aplomb.

From Automotive News:

In his latest appeal, Uchida pledged that the midterm plan unveiled in May would restore the embattled carmaker to a growth trajectory, but he warned a full rebound still needed time.

One benchmark of recovery, he noted, would be a return to positive free cash flow. He predicted that would happen sometime between October 2021 and March 2022. Nissan, which just posted its first full-year net loss in 11 years, bled ¥641 billion ($5.95 billion) in cash from its core automotive business for the year. But Uchida said the net cash position is still flush enough to get the company through the COVID-19 pandemic thanks to newly secured lines of credit.

Uchida insisted the midterm plan plots a path to full recovery in four years. The plan aims to restore operating profit margin to 5 percent and increase global sales about 9 percent to 5.38 million vehicles for a 6 percent world market share. The strategy slashes costs and closes factories to reduce bloated global production capacity of 7.2 million to 5.4 million vehicles.

Investor criticism remained steadfast, however. Renault continued to be shat upon for having too much influence (and voting rights) in regard to Nissan, production quality was faulted as a reoccurring problem for the brand, and the current management lineup was bemoaned as weak while failing to help restore the company’s credibility with the public. Some investors even looked back wistfully at Ghosn’s management style, suggesting a dictatorial approach would be best.

“What you need now is top-down strong leadership. You shouldn’t just spend time on democratic discussion. We need dictatorship,” the shareholder said. “Ironically, when Mr. Ghosn arrived at Nissan, in five or six years, he made [recovery] a reality. That’s what Nissan needs.”

Uchida said he has now taken the reigns, and any failings or successes will fall squarely on his shoulders. Yet several problems remain out of his control. French influence persists and doesn’t seem to be making Japanese shareholders anything but annoyed, though it might be unreasonable to expect investor glee when times are this tough.

Prior to his daring escape from Japan, Ghosn predicted Nissan would be bankrupt by 2022 while chatting with defense attorney Nobuo Gohara. “He told me that Nissan will probably go bankrupt within two to three years,” said Gohara during a news conference. While that premonition comes without clarifications as to how, Nissan remains in a bad state, with implosion looking probable if the recovery plan fails. That said, we’ve seen automakers come back from the brink of death before — including Nissan.

 

[Image: FotograFFF/Shutterstock]

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17 Comments on “Nissan’s CEO Explains Recovery Plan to Angry Investors...”


  • avatar
    thornmark

    I’d buy Nissan noodles any day.

  • avatar
    CoastieLenn

    Man I really hope this new exec turns things around. Nissan is starting to look worse off than Mitsubishi.

    • 0 avatar
      SSJeep

      Ghosns management of Nissan should have been criminal; his misappropriations of Nissan dollars/yen to pay for his daughters seven figure wedding and his kids ivy league education was criminal.

      And all the while he cheapened Nissan product, ignored Infiniti, left jilted owners of trashed CVTs in the dark, and pushed for increased Peugeot involvement in Nissan.

      Does Uchida have a chance to save Nissan? Yes, absolutely. Get rid of all Jatco CVTs, offer the longest warranty in the business, deliver a lot of value for the dollar, and compete head-to-head against the best in class. Build solid, reliable, fun to drive cars with a bit more horsepower and more engagement than the competition. Its all about the product.

      But whatever Nissan does, if Ghosn-ism ghosts are present in the boardroom, they will not succeed.

  • avatar
    aja8888

    Where the hell are they going to sell 5.38 million vehicles in the face of the better competition?

    • 0 avatar
      CoastieLenn

      Nissan (historically) was a HUGE fan of major incentives. I remember back in 2014 when I purchased my then new Sentra SR ($21,7xx MSRP), I looked at equivalent Civic’s and Corollas all in the same ballpark MSRP. Sure, I liked the packaging and the overall feel of the Sentra better than the Civic, and the Corolla was better inside but louder NVH, I bought the Nissan for the same reason MANY people buy Nissan. A *decently* competent vehicle with HUGE rebates. I walked out with $4600 off MSRP and 0% for 72 months. A brand new car with 6 miles on it for less than $250 per month WITH SAT NAV, Moon Roof, Bluetooth, keyless drive, every option I could get on a Sentra at that time. Toyota was only willing to do $1000 off the Corolla with 2% for 60 months and Honda was offended that I even asked about rebates or financing incentives. Did I want to finance a rapid depreciation car for 72 months? Hell no. Would I pass up that deal for free money and pay it off on my own terms? Also hell no.

  • avatar
    Jeff S

    Message to CEO and Board start making quality vehicles that people will buy. You cannot cost cut your way to sales and continued poor quality will just continue to make it worse.

  • avatar
    conundrum

    “Uchida said he has now taken the reigns”

    Well, there’s his problem right there. Anyone whipping a donkey pulling a cart knows it’s “reins”, no royalty involved.

  • avatar
    kkop

    “Nissan is a Japanese company and should be ran as such”

    should be _run_ as such.

  • avatar
    Varezhka

    It takes years of mismanagement for a company the size of Nissan to go bankrupt. I guess Ghosn would be the one to know how screwed Nissan is, being the one doing the ruining.

    Back in 1999, Nissan had a lot of non-automotive businesses and assets to sell off to make the turnaround. Not so much this time. I would say good luck to Uchida.

  • avatar
    indi500fan

    For the US they need to rebrand as Datsun and roll out a retro 510 and 240Z.

  • avatar
    gasser

    As someone of a certain age, I, and my friends, bought these cars in the 1970s where they were Datsun. The quality was equal to whatever was around then (if not better than the big 3) and the Datsun name commanded list price. Maybe producing a quality product would go a long way toward increased sales and a savings in discounts. Why is this such a difficult concept to master in 2020??

    • 0 avatar
      mfrank

      It wasn’t just quality. Datsuns always seemed more modern than other brands and look more appealing inside and outside. Compare a 1979 200SX to anything else on the road in 1979. It look a decade more modern on the inside and outside. The same could be said of the 1980 Datsun 810, which was renamed Maxima in 1981. My friends parents had a 1978 200SX and the dashboard looked futuristic to me at night.

      The difference between a 2020 Rogue and RAV4 in design and quality’s embarrassing. I believe the 2021 Rogue’s a huge improvement, but the damage to the brand image has been done. Most won’t consider a Nissan. It’s really sad to see how far this company has fallen. This is the same company that launched the 240Z and 510 in 1969. I want that company back.

  • avatar
    Art Vandelay

    SE-R all the things and at least go out with a bang.

    • 0 avatar
      PrincipalDan

      ^^this…

      Oh and a Maxima without a manual trans makes no compelling case for itself over an Altima.

      • 0 avatar
        CoastieLenn

        @PrincipalDan- the compelling case for a Maxima over an Altima is if someone wants 300hp of glorious VQ 6 cylinder over 236 wheezing hp from a turbo 4.

        Other than that, you’re completely right.

        • 0 avatar
          Art Vandelay

          You used to be able to get that in an Altima though. I suppose if you go back to the 90’s though, the Altima had the 4 cylinder while the Maxima had the 6.

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