Nissan, facing growing pains, shakes up management

Tuesday, 5 November 2013 00:01 - - {{hitsCtrl.values.hits}}

YOKOHAMA, Japan (Reuters): Nissan Motor Co Chief Operating Officer Toshiyuki Shiga will step aside from the No.2 post in a management reshuffle after the company slashed its profit outlook on Friday amid a slowdown in emerging markets and quality issues. Chief Executive Carlos Ghosn has set aggressive expansion targets for Japan’s second biggest carmaker to boost both global market share and its operating margin to 8% by end-March 2017, but recalls and a sales slowdown in markets such as China and Russia have a cast shadow over the plan. Shiga, 60, will become vice chairman, stepping away from day-to-day operations to oversee external affairs. Ghosn, who is staying on, said the COO roles would be assumed by three executives. “Our slow performance delivery in the first half of this year required immediate action to be taken,” he told an earnings briefing on Friday at Nissan’s headquarters in Yokohama. Nissan slashed its net profit outlook for the year ending March 2014 by nearly 20% to 355 billion yen ($3.62 billion). It also cut its global sales plan for this financial year by 1.8% to 5.2 million vehicles after seeing sales drop year-on-year in April-September in areas including China, Europe, India and Brazil. The costs involved in Nissan’s aggressive expansion plan, spanning over six years to end-March 2017, is weighing heavily on the company. This financial year, Nissan is investing in eight new plants and expanding one existing plant. Rapid expansion is resulting in some quality issues and Nissan has conducted a series of recalls including one in September targeting nearly one million vehicles due to an accelerator sensor flaw.

Management makeover To focus better on issues unique to each region, Nissan said it will also increase its number of regions to six from the current three. Among the changes, China will become an autonomous region and the Americas will be split into North and South Americas. Nissan’s makeover follows a similar shakeup at alliance partner Renault SA’s. Nissan, like Renault, did not name a new COO, splitting the roles to three executives. Hiroto Saikawa will become Nissan’s de facto No.2, staying on as Chief Competitive Officer to oversee areas including R&D, purchasing, manufacturing and the supply chain, Nissan said. Executive Vice President Andy Palmer will become Chief Planning Officer, a new post overseeing global sales. Executive Vice President Trevor Mann will become Chief Performance Officer responsible for running regional operations, Nissan said. Asked whether his successor would be chosen from the three, Ghosn declined to elaborate. “We are growing enough talent inside the company to be able to replace every single person in the company when the time will come, including myself,” he said.