Uchida: U.S. revival key to Nissan's global fate

YOKOHAMA, Japan — Nissan CEO Makoto Uchida, fighting a forecast for the company's biggest-ever operating loss, says he won't be able to restore profitability without reigniting growth in the key U.S. market.

Uchida's comeback strategy hinges on improved dealer relations, a flood of better product and smooth launches for those upcoming vehicles, all part of the Nissan Next updated business plan.

"If we cannot make sure that the U.S. operations recover, we will not be able to pursue what we have set out in Nissan Next," Uchida told Automotive News last week.

"That's where we really need to rectify ourselves in terms of operations and reestablish our brand image," he said. "We want to respect what the dealer is doing and grow together."

Turning Nissan around in the U.S. won't be easy, as dealers complain about seesawing incentives, more stringent factory audits and plunging sales amid the COVID-19 pandemic.

But Uchida's battle could get a boost from a more upbeat appraisal of Nissan Motor Co.'s trajectory. Global demand is weathering the pandemic better than expected, he said. And, he added, the Japanese carmaker's outlook for massive red ink may be a bit overblown.

When Uchida unveiled the Nissan Next plan in May, the company was predicting a 21 percent tumble in global industry volume this year amid the slowdown.

Then in July, the company forecast a ¥470 billion ($4.48 billion) operating loss for the current fiscal year ending March 31.

"If you look at the past three months, I think the number is much better," Uchida said about global demand.

Uchida declined to offer new targets, cautioning that there is still a lot of market uncertainty because of the possibility of a winter wave of fresh COVID-19 outbreaks. But analysts will be watching for some improved forecasts when Nissan announces quarterly earnings this month.

In the meantime, Uchida and COO Ashwani Gupta — Nissan's point man for North America — are laser-focused on rebooting the U.S. business, where group sales are in reverse for a third-straight year.

The U.S. was once Nissan's biggest and most profitable market. But China has supplanted it as the company's earnings engine. Nissan's U.S. sales plunged 41 percent to 398,478 vehicles from April through September, the first six months of its fiscal year. Its China sales rose 4.2 percent to 778,923 — almost double the U.S. total.

Uchida says the remedy is refocusing the U.S. business on quality, not quantity, of sales.

A big test will be the rollout of the next-generation Rogue compact crossover, which reaches the U.S. this fall.

The redesign of Nissan's bestselling nameplate is a symbol of the new Nissan. "We have to make sure our new vehicle launch is successful to further enhance Nissan value," Uchida said.

Pickups will be another focal point for Nissan in the U.S. going forward, he added. The Frontier midsize pickup, for example, is one of the updates promised in the "Nissan A to Z" product blitz. The redesign, its first since 2004, could arrive in the second half of 2021.

Also on tap is the Ariya all-electric crossover, the blitz's "A," and a redesigned Z sports car, the "Z."

Uchida says the company's recovery is on track to meet the Nissan Next goals.

They entail a return to profitability in the fiscal year that starts April 1, 2021, with a core operating profit margin of 2 percent, on the way to a 5 percent margin in the fiscal year ending March 31, 2024.

In that time frame, Nissan also wants to cut $2.86 billion in fixed costs to bolster the bottom line and slash global production capacity 20 percent to 5.4 million vehicles.

Moves to streamline U.S. operations will include the termination of commercial van sales.

Uchida said communication and coordination with U.S. dealers also is on the mend, citing better results in the most recent dealer attitude survey by the National Automobile Dealers Association, conducted over the summer.

"We are improving," Uchida said of the survey. "It's not enough, but it's moving in the right direction. We really want to make sure dealer engagement is on a solid basis. That comes first."

In the winter 2020 NADA study, Nissan ranked 28 out of 31 brands surveyed. That was down from 26 in the previous survey and from 24 five years prior. Nissan's score sank in consideration of dealer input and in ease of doing business. But it improved in efforts to avoid incentive complexity.

Nissan said it improved in the summer survey, but it declined to provide details.

"Our scores in almost all key areas showed a statistically significant increase," said spokeswoman Azusa Momose. "We are changing our business and changing our culture to elevate the value and sustainability of Nissan."

To be sure, dealer relations, while improving, have had their rocky moments.

Nissan reintroduced stair-step incentives this year, to the chagrin of many retailers, after leaders pledged to scale back the brand's reliance on the volume-based payouts. And Nissan sparked ire again in some corners when it began stepping up factory audits of dealer warranty claims.

On the plus side, Nissan should be able to better focus on getting its own house in order.

Tensions with alliance partner Renault siphoned management energy and attention for the better part of two years, following the November 2018 arrest of former Chairman Carlos Ghosn.

Since the summer, alliance issues have taken a back seat as Nissan, Renault and Mitsubishi Motors focus inward on solving their own problems. Uchida said all's quiet on the alliance front, and that's a good thing.

"It looks quiet. It sounds quiet. Maybe that's good," Uchida said.

In actuality, the CEOs of each company still hold monthly meetings, now with Luca de Meo representing Renault since taking the helm in July. Uchida is another relative newcomer; he took the top post at Nissan last December. Mitsubishi CEO Takao Kato has been in his post only since June 2019.

It is truly a generational change for a Franco-Japanese partnership dating to 1999.

Uchida said he is committed to maintaining the alliance and better leveraging the benefits of joint purchasing, R&D and manufacturing. The new electric vehicle platform that underpins the Nissan Ariya, for instance, was developed by Nissan but will be used by Renault as well.

"There are a lot of assets that we have built up over the last 21 years, and these are the main discussions we are doing monthly with our partners," Uchida said.

One topic not in the mix, however, is the issue of a merger with Renault, Uchida said.

Renault's pursuit of a merger with Nissan in the wake of Ghosn's ouster sowed distrust and soured relations for much of 2019, before Uchida took office.

"Every month we are talking, but we never talk about a merger," Uchida said. Asked whether he opposes a merger, as his predecessor Hiroto Saikawa had, Uchida diplomatically demurred.

"I would say 'no opinion,' " Uchida said. "The only thing we are thinking today is how to make sure we ourselves are at the right level. Have we had a merger before in the past 21 years? No."