Last week, Nissan and Honda personally admitted that they had canceled their merger talks, and the much-anticipated plan to become the world's fourth-largest automaker was shattered.
On the same day, Nissan released its third-quarter financial report for fiscal year 2024. Its operating profit was lower than market expectations and its losses were further expanding. Nissan expects its net loss for fiscal year 2024 to reach 80 billion yen. In order to stop the loss, Nissan is trying to cut costs. Nissan CEO Makoto Uchida said: "Without the support of future partners, the company will still find it difficult to survive."
Can Uchida break Nissan's dilemma? The latest news is that according to people familiar with the matter, Honda seems to be interested in resuming merger negotiations with Nissan, provided that Uchida leaves Nissan.
Five years ago, when Makoto Uchida first took office, Nissan was in a similar predicament.
Former CEO Ghosn's almost crazy Power88 expansion plan put Nissan in danger (sales fell and profits plummeted), and he was later arrested on charges of financial misconduct. In 2019, in order to end Nissan's leaderlessness, the board of directors pushed Makoto Uchida, who graduated from the theology department, to the forefront. The two authors of "Crashing Nissan" pointed out in the book that Makoto Uchida's appointment as Nissan CEO was a compromise.
"Uchida is not a lifelong employee of Nissan. He joined the company in 2003 after working for many years at Japanese trading company Nissho Iwai Co., Ltd. He is not well-known even within his own company. Uchida is seen as a compromise candidate, appointed as a result of ongoing tensions with Renault. Nissan's conservatives favored Jun Seki, then vice president in charge of reviving performance. The camp led by Renault supports Ashwani Gupta, a respected automotive veteran from India. There are objections to both candidates. Jun Seki, a science and engineering student who graduated from the National Defense University of Japan, is seen by some in Renault as a nationalist provocateur. At Nissan, many people believe that Gupta has close ties with Renault. In addition, although Gupta speaks fluent Japanese, he is Indian, not Japanese. Some Nissan directors insist that after the tragedy of Ghosn, the next CEO must be a local."
Uchida also doesn't have Ghosn's star quality.
Before Ghosn was arrested, the Japanese idolized Ghosn because of his Mr. Bean-like appearance and his heroic deeds in saving Nissan. In comparison, Uchida is naturally inferior. However, Uchida, who looks ordinary, still makes some people remember his face. Or, to be more precise, people remember him not as a 54-year-old Uchida but as a 20-something; the discussion is not "Who is this new CEO?", but "Since he also loves cars, he should be pretty good."
Nissan CEO Makoto Uchida at the Z-car launch in September 2020.
"Uchida's revival plan is based on Ghosn's 1999 version...cutting costs and downsizing the factory...bringing out the legendary sports car, the Z-car...However, unlike Ghosn, Uchida previewed his Z-car in his own personal style...Projected on the big screen behind him was a photo of a fashionable young Uchida circa 1993 with the first car he bought. A bronze 300ZX, the highly acclaimed fourth-generation Z-car. In the photo, Uchida, with a shaggy 90s heavy metal hairdo, acid-washed shirt, and gold chains, posed handsomely. One hand was on the steering wheel, the other hung out the driver's window, faking a smug smile. 'When you drive the Z-car,' Uchida said at the unveiling, 'you'll feel it's carrying you and Nissan into the future.'"
Where is Nissan's future? Can Uchida really see it? Playing the emotional card alone will not solve the mess left by the previous CEO.
In the post-Ghosn era, Nissan has almost lost its dominance in the most important market for it, the United States. Putting aside the actual losses caused to the company by the lack of popular hybrid models in the United States, what is more fatal is that Nissan's current image in the minds of American consumers is not conducive to its obtaining higher profits.
In 2010, when Ghosn was in office, he proposed a very radical six-year expansion plan called Power88. "8 represents the dual goals of 8% global market share and 8% operating profit margin. Among them, Ghosn hopes that Nissan will achieve a 50% growth in the most important US market, from 908,000 vehicles in 2010 to about 1.4 million vehicles. ... In order to achieve the goal, Nissan began to sell cars at a discount. Discounts will only make them spend more money, but will not make the car more valuable."
As soon as Uchida took office in early 2020, he abolished Ghosn's Power88 plan, but the sequelae of blind expansion continue to exist.
At the just-concluded third-quarter earnings conference for fiscal year 2024, Nissan expects that Nissan's deliveries in the North American market will increase by 6.2% year-on-year to 1.34 million vehicles in fiscal year 2024. But if you look closely, you will come to the conclusion that Nissan has completely become a brand associated with cheapness. The sales of almost all models of Nissan's own high-end brand, Infiniti, have declined compared with the previous year; and Nissan's cheapest car in the United States, Versa, continues to sell well in North America.
*The italicized parts are from "Crashing Nissan: Carlos Ghosn's Cross-Cultural Management Battle"
We will continue to follow the news of the merger between Honda and Nissan, showing Nissan's past and what the merger between car companies is all about. You are welcome to read the previous series of reports in order:
"Merger changes, Nissan refuses Honda's request to make it a subsidiary"
