Nissan Motor has appointed Ivan Espinosa, its chief planning officer and one of the most prominent Nissan executives who joined the company in 2003, as its new CEO, succeeding Makoto Uchida. Espinosa will assume the position effective April 1.
Nissan Motor’s new CEO will begin his tenure in a difficult position. Sales have been declining for the past few years, prompting former CEO Uchida to unveil emergency cost-cutting reforms last November. The company is currently expected to post an annual net loss of approximately $1.5 billion for the fiscal year ending in March.
According to analyst estimates, since Makoto Uchida took the helm five years ago, Nissan’s stock has generated a total shareholder return of -29%, significantly lower than the performance of the Tokyo Stock Exchange’s benchmark Topix index over the same period, according to the London Stock Exchange.
The new CEO of the Japanese company, Mr. Espinosa, will begin his tenure at a critical time, as the company embarks on a transformation plan that includes annual cost reductions of approximately $2.7 billion, in an attempt to return to profitability and avoid the worst.
However, a radical change in the company’s difficult situation is unlikely, as Mr. Espinosa will have to answer to Nissan’s longtime partner, the French company Renault, which owns a 35.7% stake in the Japanese group and holds 15% of the shareholders’ votes.
Two of its executives, including President Jean-Dominique Senard, sit on Nissan’s board of directors, allowing the French company to vigorously defend its interests. This was one of the main reasons that led to the cancellation of a potential agreement between Nissan and Honda. This will make reviving negotiations between the two companies difficult for Espinosa.
Former Nissan CEO Carlos Ghosn said in statements published by international media that a merger between Nissan and Honda is “meaningless,” because the two companies manufacture similar vehicles and compete with each other.
He added, “From an industrial perspective, there is duplication in everything” between the two companies, adding that integration is necessary for a merger, but there is no integration between Honda and Nissan.
Mr. Ghosn also said, “If this merger happens, I personally don’t think it will be successful.” In another statement, he said that Honda’s reason for wanting to merge with Nissan is not commercial or industrial, but rather to prevent China from taking over the Japanese company. It seems that the former CEO’s words were largely realistic.
Japanese automaker Nissan, the third-largest automaker in Japan and one of the largest in the world, with a market capitalization of $10 billion, is currently struggling with financial problems, declining sales, and intense competition, particularly from Chinese companies. It may also face tariffs due to US President Donald Trump, who wants to impose further tariffs on companies that refuse to cooperate with his administration.
