YOKOHAMA, Japan -- Nissan Motor Co.’s new CEO, Makoto Uchida, says he will visit the U.S. “as soon as possible” to get a firsthand feel for the carmaker’s troubled business in the key market.
The executive, who took office Dec. 1 and has no long-term work experience in the U.S., said it is important to experience the gemba, the Japanese term for the front lines of operation.
“I would like to go to the gemba as soon as possible,” Uchida said of visiting Nissan’s North American operations in an interview Friday at the company’s world headquarters outside Tokyo.
“Sitting in the office does not make you understand well,” he said.
Uchida, 53, buckles into the driver’s seat at scandal-plagued Nissan after piloting its China operations and working in joint purchasing with French partner Renault.
He takes the helm at a critical turning point as Japan’s No. 2 carmaker battles slumping profits, an aging product portfolio and soured relations with its 20-year alliance teammate.
Tackling Nissan’s declining U.S. business, which accounts for 27 percent of its global sales, is a top priority for Uchida as he tries to boost profits. Nissan was able to prop up profitability in the June-September quarter by cutting incentives and other sales expenses, even as U.S. sales shrank.
Uchida said it is important to go to the U.S. to meet Nissan employees, dealers, suppliers and investors. But he did not say when he planned to make the trans-Pacific trip.
Going to the gemba
“Whenever I go to the gemba, I first discuss with our people how they are feeling,” he said. The mission, Uchida added, is “trying to understand what is really going on.”
Nissan Group’s U.S. sales were down 7.8 percent to 1.24 million vehicles through November, in an overall market estimated to be down only 1.4 percent. Market share dropped to 8 percent from 8.6 percent. Sales of the Infiniti premium brand were down 19 percent in the first 11 months.
Uchida said Nissan must continue to improve the quality of its U.S. sales by keeping incentive spending appropriate to the value of its vehicles. Nissan fell into trouble partly by relying too much on incentives and fleet sales to chase unrealistic volume targets, he said.
“We need to have this well controlled,” Uchida said.
Nissan must also make a better pitch to U.S. customers for its technologies, including electrified drivetrains and drive-assist systems such as ProPilot, Uchida added. The CEO bought his own first-generation Leaf electric vehicle in 2013 and used it for his daily commute to work.
Uchida said his revival plan hinges on changing Nissan’s corporate culture, restoring public trust in the company and improving performance. He inherited a midterm revival plan from previous CEO Hiroto Saikawa, who resigned in September. But he will review it and possibly make tweaks.
That road map involves slashing 12,500 jobs worldwide, consolidating the lineup and cutting global production capacity to 6.6 million vehicles a year from 7.2 million. Saikawa’s plan also calls for rebuilding U.S. sales to 1.4 million vehicles in the fiscal year ending March 31, 2023.
It targets a parent company operating profit margin of 6 percent that year.
Parent company operating profit fell 70 percent in the July-September quarter, following a 99 percent plunge in the April-June period. For the current fiscal year ending March 31, the company expects operating profit and net income to both fall by more than half.
Operating profit margin is forecast to dwindle to 1.4 percent in the current fiscal year, compared with the 2.7 percent recorded in the previous fiscal year.
“There are many things to do,” Uchida said. “But it’s getting off to a good start.”