Nissan is seeing sales and profits tumble, as its once revered former chairman, Carlos Ghosn, awaits trial on charges of financial misconduct.
Nissan Motor Co. says it is beefing up corporate governance and sticking with its alliance with French partner Renault SA and smaller Japanese automaker Mitsubishi Motors Corp. That's critical to getting sales back on track, analysts say. But the way forward is clouded by questions about setting strategy without a visionary Ghosn there to guide it.
Some issues critical for Nissan's future:
Who's in charge?
Nissan veteran Hiroto Saikawa took over as CEO in 2017. But Ghosn remained chairman until he was dismissed after his November 19 arrest. Saikawa has said an internal investigation found Ghosn amassed too much power and engaged in unprofessional and unethical dealings. Ghosn says several Japanese executives at Nissan plotted against him in what he calls "a conspiracy."
Regardless of the blame game, the maker of the March subcompact, Leaf electric car and Infiniti luxury models got approval at a shareholders meeting in early April to appoint Renault's new chairman Jean-Dominique Senard as chairman to succeed Ghosn. It's unclear who is making calls on strategically vital decisions, such as where to make certain model vehicles.
"Mr. Saikawa may have been overseeing the day-to-day operations, but all the big decision-making lay with Mr. Ghosn," said Koji Endo, auto analyst with SBI Securities Co. in Tokyo.
The scandal remains a distraction and several Nissan executives, including Saikawa, have been called in for questioning by prosecutors. The CEO has dodged calls for his resignation, saying getting the automaker back on track is his priority.
Ghosn's detractors say his main contribution to Nissan's revival was cutting jobs, which he did with zeal while restructuring the automaker early in his nearly 20-year tenure. But he also is credited with spearheading Nissan's move into electric vehicles with the Leaf, now the best-selling pure electric car, and pursuing growth in China, whose market is slowing but is still the world's biggest for vehicle sales.
How are things going?
Nissan's vehicle sales in Japan tumbled 18 percent in March compared to a year earlier, according to the Japan Automobile Dealers Association. Nissan's overall sales fell 10 percent in the first quarter. In the US, Nissan's first quarter sales fell 12 percent, while Toyota's slipped 5 percent and Volkswagen's rose 2 percent.
Endo said buyers in Japan and France are concerned about resale value, which tends to go down when automakers encounter scandals.
Nissan has logged 9.2 billion yen ($83 million) in costs from alleged underreporting of Ghosn's compensation. It has downgraded its profit forecasts for the fiscal year through March twice and now projects a 319 billion yen ($2.9 billion) profit, down from its initial projection for a 500 billion yen ($4.5 billion) profit.
Nissan shares, which have stagnated somewhat in recent years, have dropped about 10 percent since Ghosn's arrest.
And the company recently has lost several other strong executives, including Jose Munoz, a Ghosn ally who had been Nissan's chief performance officer and has moved to Korean automaker Hyundai Motor Co. Nissan's executive vice-president Daniele Schillaci, in charge of global marketing and zero-emission vehicles, left to become chief executive at Italian brake-maker Brembo.
Still, the automaker remains strong: its Note compact, an electric car equipped with a small gas engine to charge its battery, was Japan's No. 1 selling car for the fiscal year through March. It was the first time in 50 years that a Nissan model won the honors, beating powerful local rivals Toyota and Honda Motor Co.
What about the alliance?
Renault owns 43% of Yokohama-based Nissan. Nissan owns 15% of Renault with no voting rights. Ghosn, a Brazilian-born Frenchman of Lebanese ancestry, was chairman of Renault, of Nissan and of their alliance — in short, the cement holding it together.
At a recent Nissan shareholders' meeting, where Ghosn was ousted from the board, a Japanese investor suggested waiting on approving Senard in Ghosn's place, arguing that while everyone knew Ghosn, no one knew Senard.
When Renault sent in Ghosn, Nissan was on the brink of bankruptcy. These days, Nissan is Renault's cash cow. Ghosn's arrest brought to the surface disgruntlement in Japan over a perceived power imbalance. But analysts say the automakers need each other because of shared parts, engineering, markets and suppliers.
Where is Ghosn?
Ghosn was released on bail late last month, three weeks after his re-arrest on fresh allegations. He was first detained for interrogation in November and released on bail for the first time in early March.
He is in Tokyo awaiting trial, subject to restrictions on his movements and contacts.
Ghosn says he is innocent of charges he under-reported his retirement compensation and that the transactions prosecutors say amount to breach of trust were legitimate business payments that caused no losses to Nissan.
He has hired a strong legal team, vowing to clear his name. It will likely be months before his trial begins.
At one time, Ghosn's no-nonsense managerial style was revered as an antidote for this nation's traditionally insular and consensus-driven ways of doing business. His success in helping transform Nissan from near bankruptcy into a leading automaker was a textbook example for international collaboration.
Karl Brauer, executive publisher of Kelley Blue Book and Autotrader, said the ups and downs of the Ghosn affair aren't as critical as Nissan's need to focus on products, especially as competition intensifies over electric vehicles and autonomous driving.
The focus, Brauer says, needs to be on enhancing efficiency and improving sales.
Nissan has declined comment on Ghosn's criminal case.
"The company's focus is on stabilizing operations and strengthening its management structure, while addressing the weaknesses in governance that enabled this misconduct," said company spokesman Nicholas Maxfield.
Word on the street
Nissan's dealers are hoping the whole drama will just blow over.
Customers coming into showrooms do talk about Ghosn's case, said Akio Yoshida, a spokesman for Nissan dealerships in Tokyo."The damage to our sales is not zero," he said of the Ghosn saga. "But now it's more a tabloid drama. And we are focused on selling good products."