In early October, Nissan Motor’s executives dialled into an online meeting, where CEO Makoto Uchida delivered sobering news: the company’s financial situation had worsened beyond expectations. Weak sales and profitability in the critical markets of North America and China were pinpointed as primary culprits, a revelation that sent ripples of concern through the automaker’s leadership.
Uchida, 58, outlined drastic measures to address the crisis, including cutting 9,000 jobs, reducing global production capacity by 20%, and slashing $2.6 billion in costs. Despite this, some of the managers questioned why Nissan had failed to hedge its bets by offering hybrid vehicles in the US, a market now clamouring for them.
Struggles and stumbles
Nissan, once a pioneer in electric vehicles (EVs) with the Leaf in 2010, has struggled to maintain its competitive edge. The company’s absence of hybrids in the US—a stark contrast to its offerings in Japan—has left it vulnerable in a market increasingly favouring such vehicles due to high EV costs and insufficient charging infrastructure. While rivals like Tesla and China’s BYD surged ahead, Nissan found itself playing catch-up.
The company’s declining fortunes were further highlighted last month when it reported dismal earnings. Uchida took personal responsibility, even pledging to forfeit half of his pay, yet scepticism about his leadership continues to grow. Analysts like Seiji Sugiura from Tokai Tokyo Intelligence Laboratory have been vocal, calling Nissan’s current state a “man-made disaster” and suggesting that Uchida might need to hand over the reins to a new management team.
Mounting challenges
Nissan’s predicament is exacerbated by external factors. The election of Donald Trump as US President has introduced uncertainty, with the potential imposition of 25% tariffs on Mexico—a vital production hub for Nissan—posing a serious threat to its operations. Internally, the automaker has been grappling with production problems, management upheavals, and a series of missteps in strategy.
The once-promising Ariya EV, intended to rival Tesla’s Model Y, faced production issues and missed out on a critical $7,500 US tax credit because it is manufactured in Japan. Meanwhile, Nissan’s e-Power hybrids, launched in China, failed to resonate with consumers who favoured more futuristic designs.
Factory closures and cost-cutting
As part of its recovery plan, Nissan has begun trimming its global operations. The company recently announced that around 1,000 US employees had accepted early retirement, and further cuts are being considered in Thailand and China. Two factories in China are reportedly under threat of closure, though the Sunderland plant in Britain remains safe following recent upgrades.
One of the most likely targets for closure is the COMPAS joint-venture plant in Mexico. Currently operating at a fraction of its 230,000-vehicle capacity, it has been deemed uncompetitive by industry analysts.
Activist investors circle
Uchida’s leadership has come under scrutiny from activist investors. Singapore-based Effissimo Capital Management and Hong Kong’s Oasis Management have quietly built stakes in Nissan, increasing pressure on the company to deliver a turnaround. Effissimo has confirmed its 2.5% stake, while Oasis is estimated to hold around 1.5%.
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Despite the growing challenges, Uchida remains resolute. “I am determined and committed to fulfil my duty as CEO,” he stated during a recent earnings press conference.
Decline and future prospects
Nissan’s decline has been precipitous. Vehicle sales have dropped by 40% since 2017, and its stock value has plummeted by 70%, erasing approximately $30 billion in market capitalisation. Once Japan’s second-largest automaker, it now trails behind Toyota and Honda, the latter having surpassed Nissan in recent years.
Looking ahead, Nissan plans to launch 34 hybrid and EV models by 2030, with a plug-in hybrid set for release in the US by March 2026. However, critics argue that the company’s slow response to market trends and internal inefficiencies may hinder its recovery efforts.
Uchida’s ability to navigate these turbulent waters will not only determine his tenure but also the fate of Nissan as it struggles to regain its footing in an increasingly competitive automotive landscape.
