Why Nissan CEO Makoto Uchida Is Halving His Salary
Nissan CEO Makoto Uchida is forfeiting half his monthly salary after announcing another profit downgrade for the Japanese car manufacturer.
Executives are also taking a pay cut as part of an emergency turnaround plan, which includes cutting 9,000 jobs globally to cut costs.
Japan’s third-largest carmaker will slash global production by 20%.
Sales fell to 1.6 million units due to higher costs, especially in the US, hurt by higher selling and production costs.
Profits for Nissan slipped nearly 20% year-on-year in the first half of the fiscal year, as sales suffered in America and China.
The company lowered its production forecast for the full year to 3.2 million cars, down from a previous forecast of 3.45 million, and slashed its annual operating profit forecast by 70% to ¥150bn (£764m).
Why is Nissan having problems
Nissan has been plunged into crisis since it lacks the hybrid vehicles that have helped rivals Toyota and Honda, especially in the US.
It has also suffered from cut-throat competition from domestic electric vehicle producers in China, the world’s largest car market.
Uchida acknowledged Nissan didn’t respond quickly or flexibly enough to global changes, including market tastes and soaring raw material costs.
“I take this situation very seriously,” Uchida told reporters.
"Nissan will restructure its business to become leaner and more resilient, while also reorganising management to respond quickly and flexibly to changes in the business environment," Uchida announced in a press release.
"These turnaround measures do not imply that the company is shrinking," he added.
In response, Nissan has also installed Guillaume Cartier, currently the chair of Nissan's Africa, Middle East, India, Europe and Oceania unit, in the new role of chief performance officer, in which he will oversee sales and profit.
Struggling in China
Nissan joins a growing number of foreign automakers struggling in China, hurt by intensifying competition from nimble Chinese manufacturers in the booming electric vehicle segment.
Major Japanese automakers including Toyota, Nissan, and Honda have all reported sales declines in China for three consecutive years.
Partly, it’s an image problem as premium Japanese cars are not as sought after as European and US luxury marques. Also, Japanese cars have been hit by a wave of recalls due to manufacturing problems.
Subsidised Chinese EV makers have also substantially cut their prices, forcing Japanese brands to follow suit.
The retail share of Japanese brands dropped to 14.8% in May 2024, down from 24.1% in 2020.
Japanese brands, known for their strength in petrol vehicles, have been slow to adapt to the trend for electric vehicles in China, where sales have been surging.
To address these challenges, Japanese automakers are taking various measures, including accelerating electrification efforts, collaborating with Chinese tech companies, and launching China-specific EV brands.
Who is Nissan CEO Makoto Uchida?
Born in 1966, Makoto Uchida joined Nissan in 2003 and has risen through the ranks in various roles, including chairing the management committee for China.
Appointed as CEO in December 2019, Uchida has pledged that Nissan will be carbon neutral by 2050.
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