Nissan needs patient work, not magic cure

TOKYO - Japanese automaker Nissan Motor, which had enjoyed robust recovery under charismatic foreign boss Carlos Ghosn, must return to basics to improve its poor performance, reports said Saturday.

By (AFP)

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Published: Sat 3 Feb 2007, 5:32 PM

Last updated: Sat 4 Apr 2015, 9:47 PM

Nissan on Friday announced its first drop in annual profits since Ghosn took the helm of the loss-making company in 1999.

‘Nissan reform put to test,’ said a headline in the Mainichi Shimbun newspaper.

‘Are the miraculous recovery and steady advancement -- the so-called ‘legend of Ghosn’ -- coming to the end, or will it be able to shift into a high gear again?’ the Mainichi said.

‘The genuine value of Nissan’s management reform is put to a test,’ it added.

The Asahi Shimbun said in a headline: ‘Ghosn reform faces moment of truth.’

Faced with poor sales, particularly in its home market, the company’s net profits are now expected to slide by more than 11 percent in the year to March 2007.

The unexpectedly severe profit warning came as the Japanese automaker, which is 44 percent owned by France’s Renault, reported a 22.6 percent slump in net earnings in the quarter to December.

Nissan has blamed its recent troubled spell on a lack of new model launches.

Its outlook is in stark contrast to rival Japanese automakers Toyota and Honda which increased their US market shares with energy efficient vehicles.

Ghosn said fresh measures are in the pipeline to rebuild Nissan.

‘President Ghosn promised at a shareholders meeting in June ... that a recovery will take place from the autumn. But the October-December earnings were far from ‘recovery’,’ the Asahi Shimbun said.

‘The path to the promised goals will not be easy,’ it said.

The leading business daily Nikkei newspaper said Nissan’s recovery will not happen until 2008 because the company must spend this year to review its sales network as well as research and development structures.

‘Their first task is to ensure recovery in the markets that are backbones of their earnings,’ the Nikkei said, adding that Nissan lost shares in the key US and Japanese markets while focusing on emerging markets.

‘President Ghosn had exercised his leadership by saying ‘reform and growth’, but this year will be the time for patient hard work without ‘Ghosn magic’,’ it said.

Ghosn is credited with saving the Japanese automaker from near bankruptcy but has recently reduced the amount of time he spends running the Japanese company, as he also took the helm of Renault in April 2005.

In 1999, the Japanese public and media fearfully watched the arrival of Ghosn at Nissan, characterizing him as an ambitious cost-cutter with little sympathy for the Japanese ways of business.

However, he successfully pulled Nissan out of its previous dilapidation, and won the hearts of the Japanese people, who now revere Ghosn as a management genius and straight-talking folk hero.

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