Nissan Motor Co.’s new management team, led by President and Chief Executive Officer Makoto Uchida, faces a tough road ahead as the major Japanese automaker struggles to break from the past and improve its business in an industry undergoing rapid changes.
Nissan has shifted to a collective-style leadership by Uchida, Chief Operating Officer Ashwani Gupta and Vice COO Jun Seki, in a breakaway from the leadership of former Chairman Carlos Ghosn, who has been charged with financial misconduct in Japan. Uchida, Gupta and Seki assumed their posts on Sunday.
The new management team plans to shift from Ghosn’s expansion strategy and turn the company’s business around. But it remains uncertain whether the reconstruction efforts will bear fruit amid a rapidly changing environment surrounding the automobile industry.
“Working as ‘one team,’ we will engage in business management that is highly transparent to our employees,” Uchida said at a press conference at Nissan’s headquarters in Yokohama, south of Tokyo, on Monday, citing the popular slogan for Japan’s rugby national team, which has made the Rugby World Cup top eight for the first time. “One Team” was chosen as this year’s top buzzword in Japan on Monday.
Uchida expressed his eagerness to change Nissan’s corporate culture marked by excessive concentration of power into Ghosn that continued for many years.
“We want to show Nissan’s strengths to the world,” he said.
The task is far from easy. Ghosn’s policy of aggressively expanding auto sales resulted in Nissan lagging behind its rivals in the development of new automobiles.
According to its consolidated earnings report for the April-September first half announced last month, the Nissan group’s operating margin, or the ratio of operating profit to sales, slumped to 0.6 percent, far lower than rival Toyota Motor Corp.’s 9.2 pct.
Toyota has actively pursued a growth strategy, deciding a capital alliance with Suzuki Motor Corp. and a hike in its equity stake in Subaru Corp.
As part of its streamlining measures, Nissan plans to cut more than 6,400 jobs worldwide by the end of March 2020 and raise the factory operating rate from 69 percent in fiscal 2018 to 86 percent in fiscal 2022.
At the same time, the company will aim to achieve “steady growth centering on new products and technologies,” Uchida said. Nissan plans to release around five new car models in Japan in fiscal 2020.
Nissan is also considering establishing a new company with its alliance partners–France’s Renault SA and Mitsubishi Motors Corp. of Japan–for the development of next-generation vehicles.
The new Nissan management team simultaneously faces three difficult missions–implementing internal reforms, achieving a business turnaround and steering the three-way alliance–and needs to achieve visible results in the areas as soon as possible.
“I was attracted by Nissan’s potential for dramatic growth,” Uchida said, looking back to when he joined Nissan.
Whether Uchida and his team can successfully create a strong “One Team” and boost Nissan’s profitability remains to be seen. What is certain, however, is that they need to act quickly as time is not on their side.