We'll go out on a limb and say that no executive envies the job of Nissan Motor Company's CEO, Makoto Uchida.
Upon his ascension to the highest executive post in the company, Uchida has had to face problem after problem from the after-effects of Carlos Ghosn's leadership issues, financial problems in their last shareholder's meeting, and now the coronavirus pandemic that has played hell with, well, everything.
Earlier today, Nissan Motor Company outlined the results from the previous fiscal year (FY2019-20 which ended on March 31), and numbers told everything. Nissan's global retail sales in FY2019-20 was 4.93 million vehicles, a decrease of 10.6% compared to the preceding fiscal year wherein Nissan sold 5.516 million vehicles.
That number in itself is telling and prompted Nissan's top management to take drastic measures, which is exactly what we saw when they outlined their revised mid-term plan which would cover the company from now up to 2023.
The plan is relatively simple: Nissan will work towards becoming a lean, mean, and green automotive company.
Uchida stated that Nissan will make a 20% reduction in production capacity worldwide; something they will achieve by reducing the number of manufacturing facilities, including their factories in Indonesia, among others.
Currently, Nissan has the capacity to produce 7.2 million vehicles a year; compared to their sales performance of 4.93 million units in FY2019-20, that means they had a 31.5% of unused production capacity. By reducing production capacity by 20%, Nissan can make about 6 million vehicles per year worldwide; about 600,000 vehicles more than their projected normal operation of 5.4 million.
Nissan will also make a 20% reduction in their model line up, particularly cutting models that are aging and not performing as well in terms of sales. One thing that Uchida made clear is that they will be doing is cutting models based on age to be more competitive in the market. Currently, there are a lot of Nissan models that are over 5 years into their lifecycle; Uchida wants the age of their models to be 4 years or newer.
Another thing that Nissan will do is reduce costs, particularly with regards to general and administrative matters which Nissan aims to cut by 15%. Basically, fixed overheads and salaries.
The company will also be pulling out of South Korea, as well as other markets as needed.
Apart from cutting those massive costs, Nissan aims to make themselves more competitive, and they plan to do that by sustaining their planned roll out for many new models. The company just stated that over the next 18 months, they will launch 12 new models worldwide.
They will also focus on core technologies such as Nissan Intelligent Mobility, particularly with regards to electric and electrified vehicles. Many of the new models Nissan has planned are electric or electrified, one way or another; yes, Nissan is pushing to be more green.
There are more things discussed by Makoto Uchida and the executives present, but what is clear is the company is leaving no stone unturned to get back on the path they want to get to. In one word, that path is profitability.
One last note though: Nissan's top management will take significant pay cuts anywhere from 20 to 30%. Uchida, understandably eager to set an example, has agreed to a 50% pay cut.
Now that's a CEO.