Global Insight Perspective | |
Significance | Nissan has announced a number of managerial changes that will effectively discharge key executives from regional responsibilities. |
Implications | With this reorganisation, the company aims to address its poor performance in key regional markets and redirect its focus on resuming sustainable growth. |
Outlook | The reorganisation of Nissan's management team, which involves no fewer than 20 new appointments, is not the only action taken by Ghosn to allay shareholder's concerns over the carmaker's short-term performance and more operational changes could be announced when Nissan presents its full-year earnings in April. |
Nissan is taking swift action to remedy its first "performance crisis" in seven years. In a press release, Japan's third largest carmaker has announced a number of managerial changes that will effectively discharge key executives from regional responsibilities. In a statement, Nissan president and CEO Carlos Ghosn said "The priority for our new management team is to act decisively on the multiple challenges facing Nissan and to boost our overall performance in 2007." As a result, from 1 April, Ghosn will hand over the responsibility of overseeing Nissan's U.S. operations to Hiroto Saikawa, presently executive vice-president accountable for the European market. This will allow Ghosn to focus on his role of joint president and chief executive officer (CEO) of Renault and Nissan. Also, Toshiyuki Shiga will remain chief operating officer (COO) at Nissan but will no longer oversee General Overseas Markets (GOM), instead focusing on the domestic operations.
The main managerial changes are outlined below:
Executive Vice-Presidents
- Hidetoshi Imazu, senior vice-president, vehicle production engineering division is appointed executive vice-president, manufacturing and SCM. Imazu will be proposed as a director of the company at the annual general shareholders' meeting in June.
- Tadao Takahashi, executive vice-president, manufacturing is appointed vice-chairman with responsibility for external and government affairs and the intellectual asset management. Takahashi replaces Takeshi Isayama who is retiring from the company.
- Carlos Tavares, executive vice-president, corporate planning, product planning, market intelligence, brand management, design, programme management, LCV business adds the control function and the Infiniti business to his responsibilities.
- Mitsuhiko Yamashita, executive vice-president, research and development adds the total customer satisfaction function to his responsibilities.
Senior Vice-Presidents
- Colin Dodge, senior vice-president, manufacturing, Nissan Europe is appointed senior vice-president, general overseas markets (GOM), China operations and global information systems. Dodge will also serve on the Nissan executive committee.
- Junichi Endo, senior vice-president, global aftersales and conversion business adds global marketing and sales to his responsibilities. Endo will also serve on the Nissan executive committee.
- Kazumasa Katoh, senior manager, CEO/COO office, is appointed senior vice-president, total customer satisfaction function
- Philippe Klein, senior vice-president in Renault, is appointed senior vice-president, CEO/COO office and corporate administration which includes the Alliance coordination office, security office and legal department.
- Toshiharu Sakai, corporate vice-president, powertrain production engineering division is appointed senior vice-president, production engineering division.
Regional Management Committees
- Colin Dodge is appointed chairman, management committee for GOM, replacing Toshiyuki Shiga.
- Hidetoshi Imazu is appointed chairman, management committee for Europe, replacing Hiroto Saikawa.
- Itaru Koeda, executive vice-president and co-chairman continues as chairman, management committee for affiliate companies and management committee for dealers (Japan)
- Hiroto Saikawa, executive vice-president, purchasing is appointed chairman, management committee for the Americas, replacing Carlos Ghosn.
- Toshiyuki Shiga, chief operating officer, continues as chairman, management committee for Japan.
Outlook and Implications
Nissan saw its third-quarter net profit fall by 22.6% and subsequently announced that it was cutting its 2006/07 full-year profit and sales forecasts. The carmaker blamed adverse external factors, cut–throat competition and continued weakness in mature markets for its underperformance. At the time Ghosn said “On top of everything that is planned through Nissan Value-Up, additional actions will be taken to boost our performance during the coming months. We will provide specific details of those plans when we announce our year-end results in April.”
The reorganisation of Nissan's management team, which involves no fewer than 20 new appointments, is not the only action taken by Ghosn to allay shareholder concerns over the carmaker's short-term performance. In response to a sharp sales decline in Japan, the carmaker announced that it will cut output at two plants in Japan. For three months starting in April, output at the Oppama and Tochigi plants will be scaled back by operating only one shift. This will enable the company to cut back inventories before launch a new model offensive targeting smaller, more economical vehicle segments.
One of the reasons why Nissan is stagnating in mature markets such as the United States and Europe is because the company's model cycle left it bereft of new product offerings for much of 2006. Nissan is beginning to address this weakness in its product line-up, and to this end released six new model lines during the third quarter of FY 2006/07, including the Altima, Livina Geniss MPV for the Chinese market, the new Skyline in Japan, and the Qashqai crossover-utility vehicle (CUV) for the European market. However, this raft of new model launches has come too late to have the required positive effect on the company's full-year results. During 2007, Nissan will accelerate its product launch programme with 11 new models set to debut.
Similar to the situation at Renault during 2006, Nissan is taking a defensive position to protect its performance in high volume markets before its new model programme kicks off while continuing to seek opportunities in fast growing markets. The Japanese is already constructing a new plant in Russia and recently announced that it will join the Renault-Mahindra joint venture in India. During the launch of the new Sentra in Brazil, Nissan has also hinted that it would produce a compact car in the country, without elaborating on the matter. It is widely expected that this would be Nissan's equivalent of the Renault Logan. The compact budget car could enter production in 2010 and use the alliance's next generation B platform.