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Nissan’s Desperate Hail Mary Pass: Ax CEO And $3 Billion In Expenses

The ax is swinging at Nissan and it is not pretty. We have chronicled Nissan’s plight over the last year and the news keeps getting worse. Today North American CEO Jose Valls announced he is leaving Nissan “for personal reasons.” This after news that Nissan plans to ax almost $3 billion in operating expenses. That is code for “man the torpedoes” because cuts will come fast and furious. It’s Nissan’s desperate, final, Hail Mary pass to profitability. 

Jose Valls leaving Nissan was almost a given. In spite of his plans for tuning up the Nissan brand, the company needs a scorched earth approach to salvation. If it can even be saved at this point. Only with the company since December 2018, he took over for another short-term CEO Denis Le Vot. 

Heads always roll when things get dire

A model poses next to a NISSAN Altima at the Seoul Motor Show 2019
The Nissan Altima | Chung Sung-Jun/Getty Images

Heads always roll when things get dire. What is most concerning is Nissan’s plans to cut out almost $3 billion in operating costs. That means right off of the bat one production line will end. It will also kill its Datsun brand a second time, and it will leave Europe. 

As Nissan is run by the Peugeot/Renault consortium in France it will leave Europe to the European companies within its group. That decision eliminated cannibalization within the organization. But once Peugeot/Renault merges with Fiat Chrysler the circumstances will be right back cannibalizing another group partner.

Can you name anything compelling in the current lineup?

Nissan dealership | Getty

There have been mumblings about infusing the Infiniti brand with some mojo according to Automotive News. But how much do you devote to a dead brand? Especially, in times like Nissan is having? Can you name anything compelling in the current lineup? Yeah, we can’t either.

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Right now Nissan needs new core products. Whatever life Infiniti had left is being sucked dry by Genesis. It’s time to “cut bait” on Infiniti.

The US is Nissan’s second-largest market next to China. But dealers have been unhappy forever and volume over margins has killed Nissan. How it functions with its dealers is another hurdle it needs to clear. US sales tanked by 30% in the first quarter of 2020 when the market as a whole dropped by 12%.

The coronavirus has made mounting a comeback almost impossible for Nissan

Things were already dire for Nissan in 2019. The coronavirus has made mounting a comeback almost impossible. Nissan had its eyes set on the debut of the all-new Rogue this year which is its best-selling vehicle. Now it looks like 2020 will be a year of greatly reduced sales and more struggles. 

With the release of Valls, the existing executives are being announced in new rolls today. It’s a huge shuffle at the top. Nissan is planning other cuts in underperforming regions as it tries to bolster efforts in Japan, China, and the US. 

Valls was hired by former CEO Hiroto Saikawa to begin a turnaround in Nissan’s North American operations. The problems have only worsened-even before the coronavirus. The current CEO Makoto Uchida says “quality sales” is the magic formula for Nissan, whatever that means. If it needs a playbook it could look to Kia and Hyundai to see two companies that gained sales, depth, and a following. All of the things that Nissan once had.