YOKOHAMA, Japan — Nissan CEO Makoto Uchida urges patience with his plan to elevate brand value but promises that the repositioning will bridge Nissan to an era of revived growth.
The change won’t come overnight, he conceded. But by controlling costs now and continuing to invest in new products, he said, Nissan will be poised to take off and “restore” its rightful status.
In the interim, close communication with dealers will be more important than ever, given the wildly fluctuating market realities experienced during the COVID-19 pandemic.
“We need to restore ourselves. I’m always saying that Nissan is not at its level, that we have a lot more potential,” Uchida said in an interview at Nissan Motor Co.’s global headquarters here.
“We should be able to restore ourselves in the next two years.”
Nissan is bracing for its biggest operating loss ever this fiscal year. Under an updated business plan called Nissan Next, Uchida wants to get the company back on track.
Nissan is closing plants, realigning production and trimming models in an effort to cut ¥300 billion ($2.82 billion) in fixed costs to bolster its bottom line. The plan also banks on new products, such as the Sentra sedan and Rogue crossover, to increase net revenue per vehicle.
“We need to bridge ourselves to growth,” Uchida said. “We are not talking only about efficiency and right-sizing. We are not giving up on any investment that we need for our future growth.”
The company will start recovering next year and should achieve an operating profit margin of 5 percent in the fiscal year ending March 31, 2024, he said. That will form the foundation for a new era of expansion in line with the more robust profitability Nissan saw in the mid-2010s.
“That is a kind of minimum,” Uchida said of the 5 percent target. “We want to go further.”
Nissan is already developing a new business plan for the post-Nissan Next era, Uchida said. That plan, which would start around 2024, will focus on growth.
First, Nissan has to get through this year, and lingering uncertainties about COVID-19 pose challenges. As recently as July, Uchida noted, the outlook for U.S. demand was still somewhat glum. But more recently, expectations for a faster rebound have started to brighten, he said.
“What is most important is that we have close communication with our partners, dealers and suppliers, especially under this COVID situation. Because what we forecast may not be a situation we face,” Uchida said.
Uchida is fine-tuning a plan to dial back on U.S. retail incentives and fleet sales that was initiated under former CEO Hiroto Saikawa, who resigned last year in the wake of the Carlos Ghosn scandal.
The goal is to gradually move the brand up-market with new products and new technologies so that the Nissan image changes and customers are willing to spend more money on its vehicles.
“There are two things we are talking about. One is a brand value they are willing to pay for. And then there’s a feature with value they are willing to pay for, even the styling,” Uchida said.
“The product is starting to give confidence to the dealer about what we are saying. At the moment, it will take time to understand what we want to do,” he said. “And that’s why engagement with the dealers is most important.”