Nissan CEO Makoto Uchida said the company must take further action to turn the company around. That plan is set to be revealed May 28.
Nissan’s been struggling with sliding sales, bloated costs and management issues for much of the past three years; however, officials are preparing to reveal their restructuring plans to revive the company May 28, starting with a move to cut $2.8 billion in fixed costs.
The Japanese automaker had been on the ascent for many years as former Chairman and CEO Carlos Ghosn aggressively looked to expand its sales, especially in the United States and China. However, much of that strategy has come unraveled since he was essentially deposed by Nissan’s senior management.
The areas set to see big cuts, according to Bloomberg News, includes marketing and research. However, nothing has been finalized yet as the company’s board has not given final approval to the plan, Bloomberg reported. Publicly, officials have been mum on what’s in the plan.
(Nissan officials predict first full-year loss in a decade.)
“Nissan will announce a revised mid-term plan along with fiscal year 2019 financial results on May 28,” said Azusa Momose, a spokeswoman for Nissan, told Bloomberg. “We do not have any further comments on this subject.”
Nissan’s struggles took off with the arrest of former Chairman Carlos Ghosn for financial malfeasance. He fled to Lebanon.
The company’s problems started shortly after Ghosn was arrested after landing in Japan, accused of financial malfeasance. From jail, he maintained his innocence for more than a year. However, after repeated attempts to free him failed, he escaped to late last year.
He was replaced by Hiroto Saikawa, the CEO at the time of Ghosn’s arrest. However, he was unable to stem the tide of rising costs and falling sales, and ultimately was found to be guilty of some malfeasance as well. He was then replaced by Makoto Uchida as CEO, who is largely thought to be the driver of this turnaround plan.
In addition to cutting back the marketing budget, the company is expected to mothball its low-cost Datsun line, which was reintroduced several years ago. The brand produced inexpensive, no-frills vehicles for markets like India and Russia, where vehicles like that are popular.
Uchida hasn’t just been twiddling his thumbs since getting appointed to the big chair last year. Uchida, who headed up the automaker’s operations in China before taking over as CEO, is known for looking at things from a global perspective. His plans to expand globally appear to be less grandiose than those
Hiroto Saikawa, Ghosn’s replacement as CEO, led the effort to oust him. Saikawa later resigned after he misappropriated funds.
of the big-thinking Ghosn, especially with a slowing cash flow heightened by the coronavirus.
(Nissan may cut vehicle production by 1M as part of restructuring.)
Those “less grandiose” plans include cutting production of as many as 1 million vehicles, including the aforementioned Datsun line-up. Nissan’s plans for restructuring through to March 2023 are based on annual sales of 5 million cars by then — numbers lower than either of Uchida’s predecessors, who wanted to get to as many as 8 million vehicles sold globally.
To do that, it’s likely Nissan will need to shutter as many as four plants around the world. No selections have leaked out, but the automaker has already been eliminating jobs ahead of the announcement later this month. In addition, the company will be looking to scale back operations in place like India, Vietnam and Thailand to focus on competing profitably in the U.S., China and its home market, Japan.
Part of the effort to energize the results in those three markets, according to reports, is to strengthen Infiniti, the company’s luxury brand, which is generally looked upon less favorably than its Japanese counterparts, Lexus and Acura.
Nissan’s restructuring plan reportedly focuses energizing sales in China, Japan and the U.S.
In the markets it plans to scale back, it will rely on its Alliance partners Renault and Mitsubishi to carry the load. Clearly, Renault will handle Europe while Mitsubishi has a strong presence in the aforementioned Asian markets, Bloomberg reported.
On top of all this, the automaker is – like all the others – struggling through the reduction in sales due to the coronavirus pandemic. The result is that the Japanese automaker had to shift from predicting a profit of about $795.3 million, or 85 billion yen, to a loss of $419.7 million for its 2019 fiscal year. Additionally, the company expects to post a net loss of as much as 95 billion yen, or $888.9 billion, compared with a previous forecast for 65 billion yen, or $608.2 million profit.
(New Nissan CEO aims to “regain trust,” “restore business performance.”)
However, the company is beginning to see some bright spots on the other side of the pandemic courtesy of China. Nissan’s sales volume in China climbed 1.1% to 122,846 vehicles in April.