Uchida Makoto’s plan to turn the carmaker around following a turbulent two years centres on downsizing Nissan into a more streamlined model.
The story of Uchida Makoto’s tenure as CEO of Nissan thus far is rooted in the end of Carlos Ghosn’s. Though known for his brash leadership style and notorious for his downfall, the high-profile automotive executive was highly successful for a time. By 2017, Nissan was king of the road, selling 5.8 million vehicles and reaping an operating profit of $5.2 billion. Its alliance with Renault and Mitsubishi even toppled Volkswagen as the world’s biggest carmaker, selling more than 10 million cars combined.
The following year, Nissan started on a collision course. After failing to meet sales targets in the U.S., it tried to add volume and move aging models by resorting to deep discounts. This backfired by damaging its relations with dealers and its brand. Nissan’s big bets in emerging markets turned to losses when the economies of Brazil and Russia stalled. Sales were down even in China. In November 2018 Ghosn was arrested, and a scandal unfurled.
Uchida took over as CEO in December 2019 after his predecessor, Hiroto Saikawa, was forced to resign. He inherited a firm whose share price had fallen by nearly half over the two-year period of 2018 and 2019. Then came the challenges of 2020. Nissan’s share price has fallen further this year, by about 40%, due to the COVID-19 crisis and an operating loss of $380 million in the first quarter.
In downsizing Nissan, Uchida’s goal is to slash $2.8 billion in costs by 2021. This will entail closing factories in Spain and Indonesia, and cutting production elsewhere to lower capacity by 20% to about 5 million cars a year. Nissan will focus on selling mid-sized vehicles, electric and sports cars in America, China and Japan.
Uchida, a far more restrained automotive executive than the likes of Carlos Ghosn, aims to achieve a 5% operating margin by 2023 – a modest goal, but certainly a step up from last year’s -0.4%. The Economist opines that even this degree of profitability may be difficult to attain. This is due to less tangible factors, such as Nissan’s brand, which needs repairing. Uchida hopes that the introduction of a dozen new models in the next 18 months will help.
A bigger challenge will be to strengthen Nissan’s shaky alliance with Renault and Mitsubishi. One aspect is Nissan’s long-standing grievance concerning an uneven distribution of control: Renault has a 43% controlling interest in Nissan, while Nissan has only a 15% stake in Renault. The possibility of fully merging with the French company has bubbled beneath the surface for years. Uchida has been reticent on the subject, saying only that further integration is not on the table; nor is a rebalancing of the shareholder structure. It appears that he has more immediate concerns.