Japanese Automaker Aims to Revive Past Glories

Author | Wang Lei, Liu Yajie

Editor | Qin Zhangyong

"Nissan should not be in this state!"

These were the poignant final words of Makoto Uchida in his resignation speech.

On March 11, Nissan announced that due to the company's poor performance and the collapse of business integration talks with Honda, CEO Makoto Uchida would step down early on March 31, to be succeeded by Chief Planning Officer Ivan Espinosa, effective April 1.

The company stated that it was introducing a fresh leadership team in preparation for long-term growth.

How new is this leadership team?

The entire five-member management team led by Makoto Uchida, including the president and three vice presidents, will resign, marking a significant top-level reshuffle at Nissan.

The press conference lasted less than 20 minutes. During the event, Makoto Uchida apologized for failing to garner employee support, stating that it was time to hand over the reins to a new driver.

01 The New CEO Also Just Learned of His Promotion

It was initially believed that after Carlos Ghosn, Nissan would not appoint another foreigner as CEO. However, this time, a Mexican was selected. Based on his resume, choosing Espinosa is understandable.

The 46-year-old Espinosa is a Nissan veteran, having worked there for 22 years, just like Makoto Uchida.

He graduated from the Monterrey Institute of Technology and Higher Education and initially worked for the automotive market research firm JATO Dynamics before joining Nissan Mexico in 2003 and becoming Chairman of Nissan Americas in 2010. Prior to that, he held various positions in Southeast Asia.

Since April 2024, Espinosa has served as Chief Planning Officer (CPLO) of Nissan, responsible for product planning and development, and managing the company's global product strategy and portfolio. Some analysts have said that Nissan's choice of Espinosa indicates a heightened focus on products.

With Ivan Espinosa officially taking office, Nissan welcomes its fourth CEO since 2017.

According to previous Reuters reports, in addition to Chief Planning Officer Ivan Espinosa, Nissan's internal candidates for Makoto Uchida's successor included Chief Financial Officer Jeremie Papin and Chief Performance Officer Guillaume Cartier.

All three were senior executives under the current system, and Nissan officials had not officially announced the final candidate due to uncertainty about the psychology of various stakeholders.

Espinosa also stated at the press conference that he had just been informed of the decision and needed time to consider how to lay out the strategic plan.

Besides shock, Espinosa expressed an optimistic attitude on camera, saying he was delighted to take over Makoto Uchida's role and help Nissan shine again.

"I sincerely believe that Nissan's potential is much greater than what we see today. I will bring stability and growth to the company."

However, when asked about the possibility of restarting negotiations with Honda, Espinosa declined to comment.

He said that in the North American market, he hopes to thoroughly review the entire business and prioritize "strengthening our lineup" in the United States. In China, after the launch of the N7, Nissan will continue to introduce locally-oriented electric vehicles.

With so many popular candidates, why was Ivan Espinosa chosen?

Makoto Uchida's answer was that Espinosa was more tech-savvy and could better leverage Nissan's strengths.

Nissan's Chairman of the Board Yasushi Kimura stated that Nissan had multiple candidates, each with their own strengths, but the board believed that Mr. Espinosa was the best choice at this time. Nissan will establish a new management structure to overcome the current downturn.

Some Japanese media have analyzed that CEO Espinosa is essentially a temporary or transitional leader. In other words, Nissan has employed a delaying tactic to give the board more time to find a new successor.

Makoto Uchida had reached a point where he had to resign. According to insiders, many believed that Uchida bore significant responsibility for the company's poor performance and had to step down. Uchida himself also stated at the performance conference on February 13 this year, "If someone tells me that Nissan no longer needs me, I won't insist on (serving as president)."

Uchida also stated at the press conference that he had fallen into a situation where he could not gain the trust of employees. He added that Nissan should not be in its current state and hoped that Espinosa could bring out the best in employees and get the company back on the growth track.

Alongside Makoto Uchida, Nissan's Chief Brand and Customer Officer Asako Hoshino and Chief Strategy and Corporate Affairs Officer Hideaki Watanabe also left the company.

Guillaume Cartier, the Chief Performance Officer and one of the CEO candidates, will continue to hold that position and will add responsibilities for global marketing and customer experience.

Chief Financial Officer Jeremie Papin, also a hot candidate to succeed Uchida, will be promoted to executive officer and will continue to serve as global financial officer.

Additionally, Nissan has made several personnel adjustments to its Executive Committee, including the Chief Performance Officer of AMIEO and Chairman of the Management Committee, the Corporate Vice President of Vehicle Planning and Vehicle Component Engineering, and the Vice President of Automotive Production Engineering and Development, among others. The committee will report to the newly appointed CEO Ivan Espinosa starting April 1.

Reuters reported that Nissan may reduce its current executive team of more than 60 people (including outside directors) by 20%.

02 Is There Still a Chance for a Merger?

A well-known reason for Makoto Uchida's resignation was the breakdown of negotiations with Honda.

Previously, Uchida made it clear at a briefing that after careful consideration, the internal consensus was that they could not accept Honda's acquisition plan.

Immediately afterward, Nissan and Honda jointly issued an announcement agreeing to terminate the memorandum of understanding on considering a cooperation structure, officially ending the merger talks. Subsequently, media reported that Honda was interested in restarting the reorganization with Nissan, but only if the current president, Makoto Uchida, stepped down.

The root of the problem lies in the fact that not all members of the Nissan board were completely opposed to the proposal to become a subsidiary of Honda. Some board members, such as senior executives of the Mizuho Financial Group behind Nissan and Nissan's Chairman of the Board Yasushi Kimura, supported becoming a subsidiary of Honda.

Compared to becoming a subsidiary of Honda, they were more concerned that without reorganizing with Honda, Nissan would not have a chance to turn things around. It's worth mentioning that after the cooperation fell through, Honda stated, "If the reorganization can be restarted, we won't refuse." Clearly, Makoto Uchida became the "biggest sacrifice" in this merger saga.

Now, with Makoto Uchida's resignation, Nissan may be willing to reconsider the conditions proposed by Honda. According to Financial Times reports, relevant sources have revealed that Honda has planned to restart reorganization negotiations with Nissan after the adjustment of Nissan's senior management.

In fact, the reason for Uchida's resignation goes deeper. The root cause lies in the fact that the Nissan automotive business he reformed vigorously has not shown substantive improvement but has continued to deteriorate.

Due to previous scandals involving senior executives at Nissan, Uchida was "dragged into" the presidential election. Amid the game between Nissan and Renault, Uchida surprisingly became Nissan's CEO in 2019, and he was also considered a compromise candidate within Nissan. His appointment was also the result of continued tension between Nissan and Renault.

But it has to be admitted that Uchida was a qualified "firefighter." Since taking the helm of Nissan in December 2019, through his initiatives "Nissan Next" and "The Arc Nissan Arc Plan," he turned Nissan's losses into profits in 2021 and increased the company's operating profit to a high point of nearly 500 billion yen in 2023.

While the financial situation brought about by cost reduction and efficiency enhancement seemed to be gradually improving, it did not lead to actual revenue growth. In the recently concluded fiscal year 2024, Nissan once again swung from profit to loss.

For the nine-month period ending December 31, 2024, consolidated net revenue was 9.143 trillion yen, compared to 9.171 trillion yen in the same period last year; operating profit was 64 billion yen, compared to 478.4 billion yen in the same period last year, a year-on-year decline of 86.6%; and net profit was 5.1 billion yen, compared to a profit of 325.4 billion yen in the same period last year.

Due to extremely poor performance in the third fiscal quarter, Nissan once again announced a downward revision of its full-year outlook for fiscal year 2024, expecting net revenue of 12.5 trillion yen, operating profit of 120 billion yen, and a net loss of 80 billion yen.

The end result was plant closures, layoffs, a globally announced layoff of 9,000 people, and a 20% reduction in global production capacity.

Now, a younger leader will take over, and the situation is surprisingly similar to when Makoto Uchida took over Nissan, both facing a challenging landscape. Yasushi Kimura also bluntly stated at the press conference, "Under such circumstances, Ivan's start will be extremely challenging."

However, Espinosa already has a preliminary plan to conduct a comprehensive review of the North American market, with a focus on strengthening Nissan's product lineup in the United States. In the Chinese market, it will continue to advance the localization strategy for electric vehicles, following the recently launched N7 sedan.

As for the effect, time will tell.