Nissan's turnaround hinges on product

YOKOHAMA, Japan — If Makoto Uchida's first car is any clue, Nissan Motor Co.'s new CEO is a man with an eye for product. It was 1993 and Uchida, then at a trading company with hardly an inkling he would someday be working at Nissan, bought the critically acclaimed Nissan 300ZX sports car.

Fast-forward a quarter century, and the former purchasing executive now runs Japan's No. 2 carmaker as it faces its biggest challenges in 20 years.

Not surprisingly, the new boss says fresh and innovative product will be the key to powering Nissan out of its scandal-tainted slump.

"I love Nissan cars," Uchida proclaimed last week in his first public comments since taking the helm.

"The most important pillar of the business transformation is growth through new products, new technologies," he said. "I want our employees to feel proud that they work for Nissan."

Uchida, who took office Dec. 1, gave his vision on stage at Nissan's world headquarters, flanked by two potent symbols of Nissan's past and future. To his left was a vintage first-generation Nissan Z car in racing green.

To his right, the full-electric Ariya crossover concept in high-tech silver. The Ariya is expected to go on sale in Japan as early as next year and land in the U.S. in 2021 as the leadoff for a new generation of product Nissan hopes will fuel a corporate renaissance.

Uchida's attempt to pitch himself from the get-go as someone with more than a drop of gasoline in his veins stood in contrast to his CEO predecessors at Nissan, who rarely spoke about their personal connections with cars. It also underscored his doctrine that real growth comes from product.

"Future growth will come through new models," he said.

Nissan has been falling behind in product development. It once was the pioneer in electric vehicles, for instance, with the release of the Leaf in 2010. It has become an also-ran as rivals pile into the segment.

And the average age of Nissan's nameplates around the world is a drawn-out 4.7 years. Even top sellers such as the Rogue crossover, launched in the U.S. in 2014, have become long in the tooth.

But Nissan is about to let loose a new wave.

Part of the coming surge will be a clutch of EVs, including the Ariya, based on a new dedicated electric platform codeveloped with partner Renault. That should allow much bigger savings than the Leaf, which shared little with Renault's counterpart, the Zoe EV.

But Nissan also will rejuvenate its core models, including the Rogue. A next-generation redesign is due as early as next year, and it will come on a new shared platform with Renault and Mitsubishi. A future version may even get Nissan's e-Power hybrid drivetrain.

Uchida said rebooting Nissan's U.S. business is a pillar of his recovery plan.

"We are making progress in enhancing the quality of sales in the U.S.," the new boss said. "But it will take more time. … We need to set challenging but achievable goals."

Indeed, much of Uchida's mantra echoed that of his predecessor, Hiroto Saikawa, who was forced out of the top post in September. A stopgap CEO served in the interim while the company searched for a full-time chief executive. Uchida is Nissan's third CEO in as many months.

Like Saikawa, Uchida criticized the aggressive numerical sales targets set by former Chairman Carlos Ghosn, saying they were unrealistic, overstretched Nissan and helped trigger its downturn.

"A culture developed in which people had no choice but to promise that they would deliver the unachievable during the goal-setting process. This led employees to avoid taking initiative, working together or solving issues," Uchida said. "To hit overambitious growth objectives, people tended to pursue short-term gains. This affected investments in new technologies and products, and in the facilities and people that are essential for our future success."

Uchida promised a kinder, gentler Nissan going forward.

"By trying to hit overambitious goals, we caused a rapid decline in our performance," he said. "We have to set objectives that are challenging but achievable and understandable."

Uchida joined Nissan in 2003 from Nissho Iwai Corp., the Japanese trading firm now known as Sojitz Corp. He takes the helm at a critical turning point as the troubled carmaker battles plunging profits, an aging product portfolio and soured relations with 20-year French partner Renault.

Uchida, 53, must also rebuild the company's corporate governance and soiled reputation after the arrest last year of Ghosn for alleged financial misconduct during his time at Nissan.

Uchida also inherited a midterm revival plan set by Saikawa in the summer.

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 calls for rebuilding U.S. sales to 1.4 million vehicles in the fiscal year ending March 31, 2023.

It also targets a parent-company operating profit margin of 6 percent that year, up from a paltry 1.4 percent forecast for the current fiscal year ending March 31, 2020.

Uchida said he will reexamine that plan, possibly with a keener eye on cost control.

"We will hold discussions internally, and when we are ready, we would like to notify you what we are going to do about the midterm plan," he said. "Having said that, in the midterm plan, we need to have tight control on fixed costs. This is very important."