Nissan's new CEO is rolling up his sleeves on U.S. market
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January 06, 2020 12:00 AM

Nissan's new CEO is rolling up his sleeves on U.S. market

Hans Greimel
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    Uchida: “One of my strengths is to be ... adaptable.”

    YOKOHAMA, Japan — As Makoto Uchida gears up to rebuild the beleaguered Nissan Motor Co., there is a glaring blank spot on the new CEO's resume: U.S. work experience.

    That might be a challenge for any leader trying to reboot Nissan's flagging fortunes in that key market. The U.S. is one of the carmaker's biggest cash cows, but it has devolved into a profit-draining problem child in need of urgent discipline.

    Yet, to hear Uchida tell it, his career arc is perfectly suited to the task.

    The guitar-playing, car-guy chief executive says he has never stayed in the same job more than two and a half years. He masters one duty, he says, then moves to the next.

    "That means one of my strengths is to be very adaptable to different circumstances," Uchida said in an interview at Nissan's global headquarters here south of Tokyo.

    "I should have an instant ramp-up to knowing about the U.S.," he predicted.

    Uchida's comments, delivered shortly after taking office Dec. 1, underscore the confidence the 53-year-old brings to the job of forging a "new Nissan" after a year of tumult.

    The to-do list is long. Uchida must restore trust in a company still reeling from the November 2018 arrest of its guiding leader, then-Chairman Carlos Ghosn. Making matters worse, Ghosn burst back onto the public scene last week when he jumped bail in Japan and escaped to Lebanon. Ghosn is threatening to air Nissan management's alleged misdeeds publicly, just as the new CEO is trying to get the company, its retailers and its customers to move on.

    Uchida also must repair frayed relations with Nissan's 20-year partner and top shareholder, Renault, and he must somehow reverse the company's plunging sales and profitability.

    As for a U.S. revival, he says, much of that plan is already in motion.

    The tough-love strategy was outlined in May by former CEO Hiroto Saikawa. It calls for curbing profit-eroding incentives and fleet sales, even if that results in falling volume in the short term. In the end, the plan is to rebuild U.S. sales to 1.4 million units in the fiscal year ending March 31, 2023, or roughly what it was in 2018.

    Uchida says his job is to stay the course and make it a reality.

    "A lot of foundation has been built," Uchida said. "My responsibility is how to make this more visible. That is my mission. To make it visible internally and visible to the customer."

    International

    Uchida may not have a background in the U.S., but he is steeped in international experience — both in and outside the auto industry. A fluent English speaker, he spent parts of his childhood in Egypt and Malaysia.

    He later worked with a trading company in the Philippines.

    He joined Nissan in 2003 from Nissho Iwai Corp., the Japanese trading company now known as Sojitz Corp. Since then, he had one posting in South Korea with Renault Samsung Motors and was dispatched to China in 2018 to help run operations in what is now Nissan's biggest market.

    Nissan's board tapped Uchida from its short list of three CEO finalists because they saw him as a pragmatic internationalist with a knack for bridging divides and tending profits, said one person familiar with the board's decision. His real test is seen to be whether he can deliver better margins.

    The plan Uchida inherited from Saikawa targets a 6 percent operating profit margin in the fiscal year ending March 2023, up from a paltry 1.4 percent forecast for the current fiscal year.

    "We need signs of change very, very quickly — probably a matter of months," the person close to the board said.

    "Execution of the plan is the biggest challenge in the near term."

    Saikawa resigned in September as management churned after the scandalous departure of Ghosn. That cleared the way for Uchida's advance.

    Saikawa called Uchida skilled at working with partners in tough assignments.

    After joining Nissan, for instance, Uchida was put in charge of spearheading a push to combine Nissan and Renault's worldwide purchasing in the fields of services and facilities.

    "It is not easy to make that global, but he worked it out with Renault quite well," said Saikawa, who was so pleased that he later appointed Uchida chairman of the company's important China business.

    "He impressed me as a promising future leader," Saikawa recalled.

    Now Uchida is running the whole company and facing dire financial realities.

    The parent company's 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, 2020, the company expects operating profit and net income to both fall by more than half.

    To shore up U.S. operations, Uchida said he will visit the U.S. to get a firsthand feel for the business at the gemba, the Japanese term for front-line operations.

    "I would like to go to the gemba as soon as possible," Uchida said. "Without going to the market, you will not be able to tell what is really happening in the market."

    Nissan Group's U.S. sales were down 9.9 percent to 1.35 million vehicles last year, in an overall market estimated to be down only 1.4 percent. Market share through November dropped to an estimated 8.0 percent, from 8.6 percent, according to the Automotive News Data Center. Sales of the Infiniti premium brand were down 21 percent in 2019.

    Car guy

    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 U.S. incentives and fleet sales to chase unrealistic volume targets, he said.

    "We need to have this well controlled," Uchida said. "Our goal is sustainable growth. The focus is how we can enhance the quality of sales. And as a consequence, the volume should come."

    He said Nissan also must make a better pitch to U.S. customers for its technologies, including electrified drivetrains and drive-assist systems such as ProPilot. Uchida's plan additionally hinges on changing Nissan's corporate culture, restoring public trust and improving performance.

    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.

    "Whenever I go to the gemba, I first discuss with our people how they are feeling," Uchida said.

    The China gemba, for instance, convinced him that Nissan needs to speed up its product cycles. In recent years, Nissan let even top sellers such as the Rogue crossover get long in the tooth.

    "If you go beyond five or six years, that is a little bit aging," Uchida said. "We need a more rapid cycle. If you look at China and see the local brands, their speed is very, very fast."

    For his own rides, he prefers sports cars, and always with a stick shift. The Nissan Z was his first car and remains his favorite nameplate.

    "When I buy a car, I buy the manual transmission," he said. "Since I was 20."

    There have been exceptions — notably a Nissan Leaf EV he bought in 2013 as a commuter. A father of two teenagers, Uchida says he still hasn't settled on a new family car after getting the unexpected nod to return from China.

    "Not yet," he said. "I just came back."

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