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Nissan CEO Makoto Uchida Faces Mounting Pressure Amid Automaker’s Struggles

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Nissan CEO Makoto Uchida is under intense scrutiny as the automaker grapples with declining sales, job cuts, and strategic missteps in its critical markets, including the United States and China. The company, once a leader in electric vehicles (EVs), is now struggling to recover its footing amidst industry-wide disruptions and internal management challenges.

A Crisis in Leadership

In an October meeting with hundreds of Nissan managers, Uchida delivered stark news about the company’s worsening financial position. Weak sales in North America and China were cited as primary factors, alongside the absence of gasoline-electric hybrids in the U.S. market. Nissan’s decision to go “all-in” on EVs in the U.S. left it vulnerable as demand for hybrids surged due to high EV costs and limited charging infrastructure.

Despite being aware of this demand, Nissan delayed adapting its strategy, leading to missed opportunities. The company has sold its e-Power hybrids in Japan since 2016 but will not introduce a plug-in hybrid in the U.S. until March 2026.

“We weren’t able to foresee the rapid rise in demand for hybrids,” Uchida admitted at a November earnings conference, acknowledging management misjudgments.

Restructuring and Cost-Cutting Measures

To address these challenges, Uchida has pledged to cut 9,000 jobs, reduce global production capacity by 20%, and save $2.6 billion in costs. The company has already seen 1,000 U.S. employees accept early retirement and is considering further cuts in Thailand and China, where underutilized factories may be closed.

Nissan’s joint-venture plant in Mexico, COMPAS, is a likely target for downsizing. The facility, shared with Mercedes-Benz, has been operating far below its 230,000-vehicle annual capacity, producing only about 50,000 vehicles.

The Sunderland plant in the UK, however, is expected to remain operational due to recent upgrades. Weakness in the yen has also made Japan a relatively cost-effective manufacturing base, reducing the likelihood of significant cuts there.

Market Challenges and Missed Opportunities

Nissan has struggled to maintain its position in key markets. The company’s market share in China, once a stronghold, has eroded as it failed to keep up with shifting consumer preferences for futuristic-looking hybrids. Similarly, in the U.S., its EV strategy faltered when post-pandemic consumer spending slowed, and hybrids gained popularity.

The Ariya, Nissan’s much-anticipated EV, faced production delays and missed out on a $7,500 U.S. tax credit due to being manufactured in Japan rather than North America.

Nissan’s global sales fell to 3.3 million vehicles in 2022, a 40% decline from 2017 levels. The company’s stock has also plummeted 70% in the last decade, erasing $30 billion in value.

Internal Turmoil and Activist Pressure

Since the 2018 arrest of former chairman Carlos Ghosn, Nissan has been plagued by leadership instability. Uchida is now facing scrutiny from activist investors such as Singapore-based Effissimo Capital Management and Hong Kong’s Oasis Management, who have built stakes in the company.

The CEO has also been criticized internally for his handling of the company’s recovery and strategic direction. Analysts have questioned Nissan’s decision-making for over a year, particularly regarding the lack of hybrids in the U.S. market.

Future Prospects

Nissan is making efforts to pivot. The company plans to launch 34 hybrid and EV models globally by 2030, including a plug-in hybrid for the U.S. by 2026. Additionally, it is exploring partnerships, such as a potential long-term collaboration with Honda on batteries and research.

Despite the challenges, Uchida remains resolute. “I am determined and committed to fulfill my duty as CEO,” he stated during a recent press conference. However, with declining sales, intensifying competition from Tesla and BYD, and increasing scrutiny from stakeholders, the road ahead for both Uchida and Nissan remains uncertain.

Toyota’s Global Output Declines for Ninth Consecutive Month in October

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Toyota Motor Corp., the world’s largest automaker, reported a 0.8% decline in global vehicle production for October, marking its ninth consecutive month of reduced output. However, the drop was less severe compared to September’s 8% decline.

Despite the production slump, Toyota saw a 1.4% increase in global sales to 903,103 vehicles, setting a record for the month of October. This marks the first rise in sales for the automaker in five months.

Regional Production Trends

  • United States: Production fell sharply by 13%, primarily due to a four-month halt in manufacturing the Grand Highlander and Lexus TX SUVs caused by airbag issues. Production resumed on October 21, and operations at Toyota’s Indiana plant are expected to normalize by January.
  • China: Output dropped 9%, reflecting continued stiff competition from local brands.
  • Thailand: Production decreased by 13%, driven by weaker demand.
  • Japan: Output rose 8%, recovering from disruptions caused by a supplier’s accident a year ago that had temporarily slowed production across multiple plants. Japan now accounts for roughly one-third of Toyota’s global output.
  • Canada and Mexico: Both regions saw modest increases in production, up by 2% each.

Broader Implications

The October figures highlight challenges Toyota faces, particularly in its two largest overseas markets, the U.S. and China. While the resumption of halted SUV production in the U.S. may provide a boost in the coming months, Toyota continues to navigate intense competition in China and shifting demand dynamics in other key regions.

The production and sales data exclude figures from Toyota’s affiliated companies Hino Motors and Daihatsu but include the luxury Lexus brand.

 

China’s Car Sales Rebound in September, Driven by Subsidies for EVs

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After five consecutive months of decline, China’s passenger vehicle sales rebounded in September, posting a 4.3% year-on-year increase. The uptick was largely fueled by a government subsidy program aimed at encouraging the trade-in of older vehicles, part of a broader economic stimulus package. The world’s largest automotive market saw sales rise to 2.13 million vehicles, up from 2.04 million in the same period last year, with electric vehicles (EVs) and plug-in hybrids driving the growth.

Surge in Electric Vehicle Sales

While sales of gasoline-powered cars continued to decline, the rise in new energy vehicles (NEVs)—which include both electric and plug-in hybrid models—was striking. NEV sales jumped 50.9%, accounting for 52.8% of total car sales in China. September marked the third consecutive month where sales of battery-powered cars outpaced traditional gasoline vehicles. In total, 1.12 million EVs and plug-in hybrids were sold in September alone, bringing the total for the first nine months of the year to 7.13 million.

Tesla, a major player in China’s EV market, saw its sales surge by 66% year-on-year, selling over 72,000 vehicles in China during September. Chinese EV makers, such as BYD and Xpeng, also experienced record-breaking sales, further solidifying their position in the market.

Government Subsidies: A Key Driver

China’s government played a significant role in boosting NEV sales through the expansion of its subsidy program in July 2024. Under the program, consumers who scrap older vehicles and replace them with EVs can receive a subsidy of over $2,800, double the amount introduced in April. For those opting for more fuel-efficient combustion vehicles, the subsidy is $2,100. By late September, 1.1 million consumers had already registered to take advantage of the trade-in incentives.

Cui Dongshu, the secretary-general of the China Passenger Car Association (CPCA), anticipates a strong fourth quarter for the auto market, spurred by these subsidies and increased support from local governments.

Challenges in the Broader Market

Despite the rise in passenger vehicle sales, data from the Chinese Association of Automobile Manufacturers (CAAM) painted a more mixed picture. Overall vehicle sales in China, including commercial vehicles, dropped by 1.7% in September compared to the previous year. The commercial vehicle segment, in particular, saw a sharp decline, with wholesale exports plunging by 23.5%.

This downturn in commercial vehicle sales highlights ongoing challenges in China’s automotive sector, as well as the broader economic struggles the country is facing. In response, the Chinese government has introduced a series of economic measures, including interest rate cuts and liquidity injections, in an effort to reignite growth.

Export Growth Amid Global Backlash

China’s car exports remain a bright spot for the industry, growing by 22% in September and bringing the total number of vehicles exported in the first nine months of the year to 3.55 million. This growth comes despite rising political opposition in key export markets. Last year, China overtook Japan to become the world’s largest vehicle exporter.

However, international scrutiny of China’s automotive dominance is intensifying. In September, the European Union (EU) voted to impose tariffs of up to 45% on Chinese-made EVs, citing concerns over past subsidies that have allegedly given Chinese automakers an unfair advantage. Germany, an EU member with strong ties to the automotive industry, opposed the move, while China has expressed its hope to resolve the dispute through negotiations that would establish minimum sales prices for Chinese EVs in Europe.

The United States and Canada have already taken more drastic measures, imposing tariffs of 100% on Chinese-made EVs, effectively blocking them from these markets.

Looking Ahead

As China moves into the final quarter of 2024, its automotive market is poised for further growth, thanks to ongoing government support and consumer demand for EVs. The country’s focus on bolstering its EV industry—seen as a critical element of its economic strategy—has reshaped the global automotive landscape. However, the long-term outlook for China’s auto industry remains uncertain, particularly as international trade tensions and questions about the sustainability of stimulus measures persist.