By Peter M. DeLorenzo
Detroit. Look at the photo below carefully. Study it. Let it sink in. It’s the Nissan Motor Co., Ltd. corporate brain trust in Yokohama on Tuesday declaring an annual operating loss for the second straight year. It’s also a picture of abject mediocrity in its purest form.
How bad is it for Nissan? The Japanese automaker is forecasting an operating loss of 470 billion yen ($4.5 billion) as reported by Reuters, which, according to Nissan’s own data, makes it the company’s biggest loss since as far back as 1977. It also happens to be much larger than consensus estimates of a 262.8 billion yen loss from 20 analysts polled by Refinitiv, as reported by Reuters.
That’s not all. Nissan predicts revenue will plummet to 7.8 trillion yen ($74.1 billion) and that its global vehicle sales will fall 16 percent. All of this comes after a comprehensive restructuring plan was unveiled in May, which slashed models and production capacity. This, of course, was after the removal and subsequent arrest of former CEO Carlos Ghosn, which went down in 2018.
I have been writing about Nissan’s serial incompetence for years. The company’s three-steps forward, five-back model cadence was a recurring nightmare. Too often its products were mediocre, and because of that they languished in this market unless scorched-earth incentives were used to move the metal. And Ghosn’s aggressive approach to expansion in markets that couldn’t care less about Nissan made things even worse (his infatuation with the Renault partnership and the failing Mitsubishi linkup didn’t help things, either). This formula of mediocre products + razor-thin profit margins = a brand that was going nowhere, everywhere. And this burgeoning quagmire was compounded by the fact that the company’s marketing strategy became so dependent on those incentives in this market in particular that Nissan couldn’t extricate itself from the cycle.
Nissan allegedly is the No. 2 Japanese automaker behind Toyota, but it doesn’t even remotely deserve that moniker. The company was long a ship of fools before Ghosn arrived, it was heightened during Ghosn’s tenure, and after Ghosn was forcibly removed the ship began to list badly. Everything company operatives said, or touched, seemed to go wrong. Promises of “new beginnings” were made about as frequently as the financial quarters went by. New product offensives fizzled with brutal regularity, so there was nothing left to do except pile on even more incentives, because that strategy kept the plants open and kept Ghosn off of the U.S. executives’ backs.
But now that Nissan’s Japanese operatives got what they wanted, which was Ghosn’s ostracization and removal, it has become painfully apparent that they really don’t have a clue as to what to do. Or as we like to say in The Biz: They. Got. Nothin’. So, in time-honored industry fashion, Nissan executives have resorted to throwing things up against the wall to see what sticks – and nothing ever does – which is just like old times.
Time, money and excuses are running out for Nissan. The brand itself has become crusty and undesirable, and its products are old and getting swallowed up by much more competitive entries, especially from the Korean automakers. In short Nissan is an also-ran brand and a classic reminder that there are no guarantees in this business. Just because a brand has been around a long time doesn’t mean a thing. The history of this business is littered with one-hit wonders, ego-driven glorious failures, sure things that somehow went wrong, and sometimes companies that had their time in the sun and just faded away.
Nissan has reached that point. It had – at times – what can be considered a good run. Its glory days were memorable, especially in this market when it was still called Datsun, but those moments were fleeting and seem like a long time ago. That’s because it was. Since then the company has been mired in mediocrity and held captive by mercenary prophets spouting false promises, and internal bickering, which sapped the life out of the company. In short, Nissan has been on a slow roll to oblivion, even though no one there seems to understand or believe it.
Look at the three executives below. They’re Nissan’s Sunshine Boys, still insisting that Nissan has a chance. But you can see in their eyes that their hearts aren’t in it, that they’re just going through the motions because that’s what they’re required to do. Well, it’s not working.
Times change, and the ebb and flow of this business continues on unabated. Nissan is headed to the dustbin because company operatives couldn’t get their heads out of their asses long enough to see clearly and focus on what’s important in this business.
And what is that, exactly?
It’s about the product. It has always been about the product. And it always will be about the product.
And that’s the High-Octane Truth for this week.
(Nissan)
The Sunshine Boys.