Nissan’s COO: Our models are too old, too many, Ghosn over-stretched the company
Hans · Jan 6, 2021 10:00 AM
Nissan’s new COO Ashwani Gupta is sitting on a hot seat, with an unenviable task of cleaning up the mess left behind by Carlos Ghosn, the former Chairman and CEO of Renault Nissan Mitsubishi Alliance.
Formerly the COO of Mitsubishi Motor, Gupta was appointed to Nissan in August 2019, and has been tasked with pulling Nissan out of the rut and his immediate priority is to stabilize and strengthen Nissan’s business by focusing on its core markets of USA, China, and Japan.
Nissan is currently in a pretty bad shape and it has no choice but to pull back on its activities in less profitable markets. It recently had to make a difficult choice of reducing its presence in Europe.
“Europe is a very important market for us,’ he stresses. But – and this is a critical distinction – it’s not a ‘core’ market,” Gupta told UK’s Car Magazine in an interview in December.
In 2019, before Covid-19 hit, Nissan’s sales in Europe had already dropped by a third from 2017’s level. The Nissan Juke, once hailed as Europe’s best-selling crossover, languished for 9 years before it was replaced by a second generation model, by then, rivals have caught on, while the new Qashqai, once a hot selling crossover, is now 7 years old.
Nissan’s model line-up in Indonesia is now made up of low volume, imported Thailand- and Japan-made models, while the Nissan Grand Livina is produced under contract by Mitsubishi (it’s a reskinned Mitsubishi Xpander).
Nissan Motor Indonesia, which is a wholly-owned subsidiary of Nissan Motor, sells only half as many cars as Edaran Tan Chong Motor does in Malaysia, despite Malaysia’s car market being only half as big as Indonesia, more than half of it controlled by Proton and Perodua.
So if you ever think that the Nissan brand will do better under Nissan Motor themselves instead of Tan Chong, you need to think deeper.
Gupta traced the problems afflicting Nissan today to the company’s previous expansionist ambitions (obvious reference to the Carlos Ghosn-era) overstretching Nissan, and not enough attention was paid on developing future products.
Nissan had poured too much resources and bet too heavily on the market to expand, but that didn’t happen and as a result, there wasn’t much money left to develop future products. Without new products, Nissan’s sales performance dropped further, thus keeping Nissan trapped in a vicious negative spiral to the bottom.
In 2011, Nissan was aiming to achieve 8 percent global market share and 8 percent profit margin within 6 years. That didn’t happen and Nissan ended its last financial year (ending March 2020) with USD 6.2 billion in losses, its worst in 20 years.
“We went too fast to expand in the world, anticipating that global auto markets would grow and that our sales performance would be excellent. Both those things didn’t happen,” says Gupta.
“When rubber touches the ground you smell the smoke,” he added.
“As a result we were landed with aged vehicles, a huge line-up which we could not maintain. It’s all based on investment: if you don’t have the revenue you can’t have [new] cars. It’s a vicious cycle. So what Nissan said is: let’s rationalize.”
To fix the mess, Nissan needs to retreat, focus on its most profitable markets first before paying attention to the rest of the world. Taking Europe as an example, Gupta explained:
“Total industry volume is 15 million. That’s not a small market. But our share is 2.5 per cent. We can’t do everything, so we will focus on our strengths. In Europe that’s crossovers: Qashqai, Juke, X-Trail. Then in terms of technology, we go with electric, autonomous and connected.”
Elaborating on rationale to focus on USA, China, and Japan, Gupta said, “When you tick those boxes, the US, China, Japan are our biggest markets. In the US, our market share is more than seven per cent, in Japan and China it’s more than 10 per cent. Profit? Yes in China and Japan, and in the US we think we have a potential to make [it].”
Closer to home the all-new Nissan Almera and Nissan Kicks has rejuvenated the Nissan brand somewhat in South East Asia, and the respective local Nissan distributors will have to fend for themselves for quite a while.
The Nissan Kicks is off to a strong start in Thailand, enough for Nissan to embark on a hiring spree, in the middle of Covid-19 pandemic because orders for the Kicks are coming in faster than the factory can cope.
The Kicks has been earmarked for Malaysia in 2021. Meanwhile, the Nissan Almera is certainly the best new Nissan product to be launched in Malaysia in recent times. It remains the only B-segment sedan to come with AEB as a standard feature across the range.
But before you heap all the blame on Carlos Ghosn, you might want to read this article. Unlike Toyota or Honda, Nissan's has had a long line of leaders who made some poor decisions for the company. If anything, Carlos Ghosn should be credited for forestalling the company's demise. For awhile, it looked like Nissan was heading in the right direction, until it didn't.