Nissan CEO Uchida’s departure looms as company grapples with financial losses

TOKYO, JAPAN: Nissan Motor Co. is in the process of planning to replace its chief executive officer following another disappointing set of earnings and the recent breakdown of negotiations to merge with Honda Motor Co., according to sources familiar with the situation.

Nissan’s board of directors is exploring potential candidates to succeed Makoto Uchida, a company veteran of 22 years who has served as CEO since late 2019. One insider, who requested anonymity due to the confidential nature of the discussions, disclosed that the search is underway.

The company’s stock experienced a rise of up to 4.9 percent in Tokyo during morning trading. The movement toward initiating Uchida’s departure indicates that Nissan still possesses the potential to seek a partner for survival, according to Bloomberg Intelligence.

Reports from Japanese business publication Diamond indicate that Nissan plans to appoint Jeremie Papin, who was appointed to become chief financial officer in December, as Uchida’s successor.

At 58 years old, Uchida expressed earlier this month that he was willing to step down if requested but preferred not to do so until Nissan’s business stabilised. He warned investors of a projected net loss of ¥80 billion ($536 million) for the fiscal year ending in March, a stark contrast to the ¥380 billion net profit he had predicted just nine months earlier.

Nissan is facing a looming record debt due next year, with all three major credit rating agencies having downgraded its ratings to junk status, following two downgrades in the past week. Late last year, Uchida sought assistance from Honda, reaching a preliminary agreement to merge under a joint holding company. However, these negotiations were terminated this month after the parties clashed over terms.

Foxconn says its aim is cooperation with Nissan, not acquisition

Despite the merger discussions failing, Honda and Nissan executives have indicated that they will continue their strategic partnership with Mitsubishi Motors Corp., collaborating on developments related to electric vehicle batteries and software. Uchida noted during a press conference on February 13 how vital such partnerships would be for Nissan’s future, stating, “It will still be difficult to survive without leaning on future partnerships.”

Nissan is struggling to attract consumers with its outdated product lineup and has had to invest heavily in incentives and promotions to manage excess inventory. In November, Uchida announced plans to lay off 9,000 employees and reduce one-fifth of the company’s production capacity.

Renault SA, Nissan’s largest shareholder and long-time alliance partner, expressed criticism over Honda’s tough bargaining tactics regarding the merger’s structure and commended Nissan for retreating from negotiations. Simultaneously, Renault seems to be distancing itself from Nissan, with CEO Luca de Meo stating that China’s Zhejiang Geely Holding Group Co. may be a more suitable partner for the future than Nissan.

Additionally, Hon Hai Precision Industry Co., better known as Foxconn and recognized as the manufacturer of iPhones, approached Nissan in December about potentially acquiring a stake in the company, recently stating its openness to purchasing Renault’s 36 percent shareholding. The Taiwanese contract manufacturer aims to establish a presence in electric vehicle production but has faced challenges in persuading carmakers to outsource manufacturing.

In a related development, US private equity firm KKR & Co. is considering a possible equity or debt investment to strengthen Nissan’s financial standing.