Amidst managerial upheaval, market setbacks, and fractured partnerships, the future of Nissan teeters on the precipice of uncertainty. Despite drastic management reforms, the automaker seems to have returned to the precipice of its initial crisis.

Under mounting pressure, Nissan Motor Co. unveiled a management reform plan. Despite public assurances that its cash flow could sustain operations for 14 months, operating conditions in its core markets of China and the US have continued to deteriorate without notable improvement. Months of turmoil later, the eagerly anticipated merger talks between Nissan and Honda remain unresolved, leaving Nissan back at square one, urgently needing to address its existential crisis.

From Fire Chief to Fire Chief

On March 11, Nissan officially announced a restructuring of its management: CEO Makoto Uchida will step down on March 31, and Chief Planning Officer Espinosa will take the helm. Additionally, significant changes were made to the Executive Committee, with Naoi Akashi assuming the role of Chief Technology Officer, Masaharu Hirata becoming Chief Product Manufacturing Officer, and Jeremy Papin continuing as Chief Financial Officer and being promoted to Executive Officer. These changes will take effect on April 1, 2025.

Behind this high-level shakeup, Nissan grapples with operational challenges stemming from both internal and external pressures. On one hand, the company's performance remains sluggish, and the recovery plan has failed to elicit substantial improvements. On the other hand, the collapse of merger talks with Honda has clouded its transformation path. In a statement, Nissan Chairman Yasushi Kimura said that after thorough deliberation, the Nomination Committee deemed Espinosa the best candidate to steer Nissan out of its quagmire and drive change.

According to the Nihon Keizai Shimbun, the Nomination Committee comprises five members, including former Sony Interactive Entertainment CEO Andrew House. During discussions about the post-April 2024 operating system, a growing consensus emerged that Makoto Uchida should step down. Notably, Nomination Committee member Motoo Nagai, former Vice President of Mizuho Trust & Banking Co., and Chairman Yasushi Kimura both supported Honda's proposal to make Nissan a subsidiary, ultimately opposing the decision that led to the integration negotiations' collapse.

Makoto Uchida proposed measures such as a 7% workforce reduction in Nissan's revival plan, but most Nomination Committee members believed these measures would struggle to reverse the company's declining performance. Consequently, the committee decided to clarify management responsibilities and push forward a fresh wave of reforms.

Honda's distrust became a catalyst for change at Nissan. During integration negotiations, Honda made it clear that a change in Nissan's management team was a prerequisite for renegotiation. Despite numerous consensuses reached by senior executives from both companies, Nissan's internal management chaos led to repeated reversals of agreements, much to Honda's dissatisfaction. Ultimately, Honda proposed turning Nissan into a wholly-owned subsidiary. This adjustment in Nissan's management presents a new opportunity for future cooperation talks.

At the press conference, Makoto Uchida admitted losing the trust of some employees, stating, "The company must transition to a new operating system as soon as possible and start anew." He hopes the new management team can maximize employee potential and propel Nissan back onto a growth trajectory. Espinosa echoed this sentiment at a subsequent press conference, "My top priority is to work closely with the team to jointly advance corporate transformation." On March 19, Nissan further announced a new leadership structure effective April 1, including eliminating some management levels, implementing a flat management system, and cutting about 20% of positions to enhance operational efficiency.

While Nissan hopes the new CEO will lead it out of its predicament, the market remains skeptical about Espinosa's capabilities. Koji Endo, an analyst at SBI Securities, noted, "Espinosa hails from the product planning department, and it's precisely product planning issues that have contributed to Nissan's declining performance in recent years, which is concerning." However, he added, "Amidst Nissan's struggle to recover independently, whether to reconsider integration with Honda remains the focus of external attention."

During the successor selection process, Nissan navigated a series of trade-offs and power struggles internally. Jeremy Papin faced controversy due to poor US market performance, while Guillaume Cartier, the revival plan executor, was questioned about his execution capabilities and did not become the final choice. Ultimately, the Nomination Committee chose Espinosa, with experience in product planning and the global market, hoping he can bring new breakthroughs to Nissan.

Divergent Strategies for China and the US Markets

The roots of Nissan's current crisis lie in the dual challenges it faces in the Chinese and North American markets. To address these, Nissan is accelerating its strategic adjustments. In China, the company is focusing on electrification and intelligence, strengthening localized operations, and deepening cooperation with local technology enterprises. In North America, Nissan is responding to market challenges through product line expansion, dealer system optimization, and brand marketing upgrades.

Simultaneously, Nissan is advancing "The Arc Nissan Plan," deepening its electrification footprint in China. By 2025, the plan envisions the launch of four new energy vehicle models, including pure electric, extended-range, and plug-in hybrid vehicles. The first pure electric sedan, N7, is scheduled for presales in April and will be equipped with an advanced intelligent driving system developed in collaboration with autonomous driving company Momenta.

Furthermore, Nissan is accelerating in-depth cooperation with Chinese technology enterprises to facilitate the implementation of intelligent cabins and autonomous driving technologies. Dongfeng Nissan, a joint venture, has confirmed joint development of HarmonyOS cabins and ecosystems with Huawei, aiming to extend advanced intelligent driving functions to more models. Dongfeng Nissan is also collaborating with companies like Gaode Maps, Baidu, and iFLYTEK to optimize intelligent cabin, navigation, and voice interaction experiences, catering to Chinese consumers' demands for intelligent travel.

In autonomous driving commercialization, Nissan is exploring globally. The company has completed field tests of the Pro PILOT 2.0 system in Yokohama, Japan, and plans larger-scale autonomous driving service tests in Yokohama for fiscal years 2025-2026. Nissan stated that if tests proceed smoothly, it will officially launch autonomous driving mobility services in fiscal year 2027, accompanied by a remote monitoring system to ensure safety and sustainable operations.

Compared to China, North America has always been a cornerstone of Nissan's global strategy. However, recent years have seen intensified competition in the North American market, particularly in the hybrid vehicle segment, where Nissan's layout has lagged, leading to market share erosion. To enhance competitiveness, Nissan plans to introduce the Zhengzhou Nissan Z9 pickup truck series, offering both gasoline and plug-in hybrid versions. This product combines Nissan's global quality control system with Dongfeng's supply chain resources, targeting mid-to-high-end and off-road segments, aiming to carve a niche in the highly competitive North American pickup truck market.

Meanwhile, Nissan North America is actively adjusting its dealer system to address declining dealer profitability in recent years. Data shows that in the first half of 2023, Nissan dealers' profits decreased by 70% compared to the same period in 2022, affecting about 38% of the 1,071 dealers in the US. To alleviate this, Nissan is taking various measures, including optimizing sales and after-sales service processes, adjusting sales strategies, and increasing dealer sales incentives. According to the US Auto Dealer Industry Report, by the end of 2024, the average sales incentive in the US auto industry had risen to $4,000 per vehicle, a 50% increase from the previous year. Nissan stated it would improve dealer profitability and enhance market competitiveness through similar incentive policies.

Additionally, Nissan is making internal adjustments in North America, including accelerating new energy vehicle model development, optimizing product line layouts, and upgrading after-sales service systems. The company is also deepening cooperation with local suppliers and technology partners to integrate advantageous resources, aiming for a rapid competitiveness boost in the short term. Industry insiders believe that Nissan's adjustments in North America are not just an internal transformation but also have significant implications for the global market landscape.

Back to the Crisis Starting Point

Nissan stands at the crossroads of a new round of strategic adjustments. Amidst industry changes, internal management reorganization, and intensified market competition, Nissan's next move will dictate its future trajectory. Firstly, the possibility of cooperation between Nissan and Honda has once again become a market focus. One of Nissan's capital providers, Mizuho Bank, has explicitly stated that "integration with Honda is the best choice" and hopes to restart negotiations promptly. The complete turnover in Nissan's management also makes renewed negotiations a realistic prospect. However, Honda remains cautious, emphasizing the need to reassess Nissan's governance structure before making a decision.

Industry opinions are also reserved. Some analysts point out significant differences between Nissan and Honda in corporate culture, market positioning, and technology research and development directions. Hasty integration could lead to mismatched management philosophies and difficult resource integration. Additionally, both sides are not aligned in the pace and strategy of smart electrification transformation, and these potential conflicts could hinder cooperation. Conversely, some voices believe that deeply tying up with American technology enterprises and leveraging Silicon Valley's technological advantages would be the ideal choice for Nissan to achieve breakthroughs in intelligence and electrification. However, there are currently no clear indications that Nissan intends to pursue this path.

Regardless of the final cooperation method chosen, the progress of Nissan's merger negotiations reflects the challenges faced by the Japanese automotive industry during its transformation. The negotiations between Nissan and Honda were once seen as a "cure-all" strategy to alleviate short-term market pressures for both parties. However, the talks' breakdown not only exposes the reality that both companies struggle to find a common development path but also mirrors the challenging transformation Japanese automakers face amidst global competition and technological shifts.

Moreover, Nissan's predicament is not merely a business issue but also reflects the structural challenges faced by traditional Japanese enterprises in the globalization wave. Japanese enterprises have long grappled with issues like "slow transformation," "seeking stability in products," and "internal power struggles," which lie at the heart of Nissan's current difficulties.

Firstly, slow transformation has disadvantaged Nissan in global market competition. Amidst the electrification and intelligence wave, Nissan's transformation pace significantly lags behind its European, American, and Chinese competitors. While it has achieved remarkable success with classic fuel vehicles and brand heritage, the explosive growth of the new energy market has reshaped the industry landscape. Nissan's technological reserves and market response speed can no longer keep pace with rapidly evolving industrial trends.

Secondly, an excessive pursuit of stability has stifled product innovation. Japanese enterprises have always emphasized "playing it safe" and pursuing low-risk, incremental innovation, which may have been the key to success in the past but has become a hindrance to breakthroughs in the new energy era. Nissan's product replacement cycle is relatively long, and its progress in new energy and intelligent technologies lags far behind competitors in Europe, America, and some emerging markets. For instance, in the face of rapid iterations in intelligent driving and intelligent cabins by Tesla and Chinese independent brands, Nissan's response strategy has been relatively conservative, failing to swiftly launch market-competitive products.

Moreover, the enterprise's development is further hindered by internal power struggles and inflexible management mechanisms. Japanese enterprises' management model has traditionally been rather closed, with internal decision-making processes often requiring multiple layers of approval, consequently slowing down market response times. Additionally, internal factional conflicts are prevalent within these enterprises, and power shifts frequently involve intricate interest disputes, making it challenging to establish a cohesive development strategy. The extensive restructuring of Nissan's management is a culmination of internal contradictions that have accumulated over the years. Under the leadership of the new management team, how to mitigate internal friction and expedite decision-making efficiency has emerged as a pressing issue for Nissan to address.

Industry experts assert that these issues are not solely challenges faced by Nissan but also tests confronting the entire Japanese traditional manufacturing sector. Historically, Japanese enterprises relied on precise manufacturing and stringent management to forge a robust competitive edge in the global market. However, in the new era of digitization and electrification, breaking through the constraints of traditional models and achieving profound transformations in management and technology has become a formidable hurdle for all Japanese enterprises. Nissan's current plight serves as a microcosm of this broader industry dilemma.

Note: This article was originally published in the "Auto Review" column of the April 2025 issue of "Auto Trends" magazine. Stay updated for more.

Image: From the internet

Article: Auto Trends

Typesetting: Auto Trends