Eight months after Ghosn’s exit, Nissan stuck in a rut
Nissan Motor Co.’s prospects are getting bleaker by the quarter, with the Japanese automaker forced to shed 12,500 jobs and reduce production capacity by 10% as its aging lineup weighs on profitability amid a global slump in car demand.
In the 250 days since the arrest of former Chairman Carlos Ghosn for alleged financial crimes, focus has shifted to the deteriorating business and the ability of Ghosn-protege-turned-accuser Hiroto Saikawa to revive the Yokohama-based company. The chief executive officer more than doubled job cuts and stepped up restructuring measures on Thursday, following a 99% plunge in operating profit for the first fiscal quarter.
A weaker Nissan means less clout for the carmaker in its alliance with Renault SA and Mitsubishi Motors Corp., which was shaken by Ghosn’s arrest as well as Renault’s unsuccessful merger talks with Fiat Chrysler Automobiles NV. Years of sales incentives that eroded Nissan’s margins and expanded fleet sales came at the expense of fresh models that appealed to drivers. To counter that, Nissan needs to work better with Renault, its main partner and 43% owner, according to Janet Lewis, an analyst at Macquarie Capital.
“Clearly the issues surrounding the alliance, where much of the investment for future products is focused, is a distraction,” Lewis said. “If they can start working from the same playbook, that would help improve sentiment about future prospects.”
Revenue fell 13% in the April-June period to 2.37 trillion yen, the steepest sales drop since the global financial crisis a decade ago. Despite the results, Nissan kept its fiscal full-year outlook for operating profit of 230 billion yen on revenue of 11.3 trillion yen.