Nissan Aims To Regain Its Previous Brand Power

Nissan Motor Co. aims to show a resolve to get back on track at its shareholders’ meeting on Monday after the automaker incurred a huge net loss in the business year that ended in March.

Nissan is determined to shift away from the past expansionist policy led by former Chairman Carlos Ghosn, who has been charged with financial misconduct.

The carmaker’s planned changes can be seen in the compilation of its four-year, mid-term business plan, named “Nissan Next,” which carries it until fiscal 2023.

In mid-June, Nissan’s chief operating officer, Ashwani Gupta, said the company will not stop product development even if infections with the new coronavirus continue spreading. At an online conference with car dealers in Japan, he emphasized that Nissan aims to release new car models in Japan, the United States, and China under any circumstances.

Amid antivirus measures like the state of emergency to contain COVID-19, customers also refrained from visiting car dealerships.

As a kickstart to reverse plummeting sales, Nissan announced the release of the new sport-utility vehicle Kicks on June 24. The new SUV is the first step in Nissan’s business reconstruction under the Nissan Next initiative, which the company hammered out in May.

Except for those of minicars, Kicks was Nissan’s first domestic release of a new model in as long as 10 years. The previous debut of a model was for the Leaf, which was spotlighted as the company’s first full-fledged electric vehicle.

Behind the expansion policy driven by Ghosn, Nissan had not released any new models, frustrating car dealers on the front line of sales.

“Even if we asked for releases of new models, our voices did not carry, because communications among [Nissan’s] executives were bad,” one of the dealers said.

Gupta clearly said that he is responsible for both the sales and product development departments. By saying so, he expressed his determination for marking a fresh start.

The process of compiling the mid-term business plan symbolized Nissan’s exit from the Ghosn regime.

On Feb. 18 at a board of directors meeting after an extraordinary shareholders meeting, an outside director pressured top executives, including President and CEO Makoto Uchida. The outside director urged, “We have only three months remaining. It’s necessary to make another conference scheme separately from board of directors meetings which are held once a month.”

Nissan was scheduled to compile the new mid-term business plan in May. But since the start of this year, the company had been besieged by problems in both production and sales due to the coronavirus outbreak, so debates about the compilation of the business plan were put on the back-burner.

Another outside director was more direct, saying, “If you can’t compile the business plan by the end of May, all of you will be fired.”

In late February, a strategy conference was held in which top executives and independent outside directors discussed the compilation of the business plan in parallel with those at the board of directors meetings.

In the years of Ghosn’s leadership, in which all management decisions were made in a top-down fashion, it was unimaginable that outside directors would take such initiative to establish a new conference structure.

The new style conferences were held almost every week, and one of them lasted for six hours. Discussions sometimes got heated.

All of the concerned officials shared the same view that such discussions had been unimaginable under Ghosn’s authoritarian management. They also agreed that management policy discussions were now being held democratically.

However, the work to compile the business plan was a race against time. The plan to reduce production capacity was predicated on the agreement of Renault SA and Mitsubishi Motors Corp., with which Nissan has a business alliance.

Nissan had to do all the related tasks, such as coordinating opinions among the three companies and negotiating with banks for fund procurement, simultaneously.

A disagreement remained until the last minute about the closure of an unprofitable plant in Barcelona that was one of the hot focuses.

Coordination with the local officials in the country behind the scenes did not result in an agreement, and thus it was not decided whether the closure would be included in the business plan when only two days remained until the announcement.

One Nissan executive said, “Until the last minute, we considered actions to take for a possibility that we would not be able to close the plant.”

Nissan’s fiscal 2019 net loss was ¥671.2 billion. The amount was second-largest next to fiscal 1999’s ¥684.3 billion at the end of March 2000, when Ghosn took drastic measures for Nissan’s business reconstruction.

It was on May 28, the date of the announcement, when the board of directors was notified that Nissan had incurred the huge net loss in the account settlement.

Only a month before that, Nissan had forecast that its net loss would be about ¥100 billion as a result of its downward revision of predicted business results. Thus, most of the directors were taken by surprise.

Uchida said: “Our future will not be better if we wait for something. Let’s start over by disclosing everything bad.” By saying so, Uchida asked other executives for their resolve.

To take responsibility for the worse-than-expected results, it was decided at a board of directors meeting just before the announcement that Uchida and other top executives would decline their performance-based bonuses.

About Nissan’s Next plan, there are some skeptical views. Takaki Nakanishi, an analyst of Nakanishi Research Institute Co., said, “It does not take sufficiently bold steps, and thus it is just a stop-gap measure.”

Uchida has only been in charge of Nissan for about half a year, and some executives questioned his management skills, saying that his actions do not have enough sense of speed.

But after the exit of Ghosn, who acted as an absolute monarch, the business plan was compiled after having as many discussions as possible.

From now on, it will be questioned whether Nissan executives will be able to implement measures in the business plan.

Originally published on https://the-japan-news.com