October 8, 2019 / 3:14 PM / 6 days ago

Breakingviews - New Nissan CEO will make Renault's life easier

The logos of car manufacturers Renault and Nissan are seen in front of dealerships of the companies in Reims, France, July 9, 2019.

LONDON (Reuters Breakingviews) - Nissan Motor and Renault’s alliance may soon be reinvigorated. It hit the skids last November when the $24 billion Japanese carmaker ousted mutual Chairman Carlos Ghosn. Almost a year later, Nissan has appointed a new chief executive whose resume suggests he will see eye to eye with his French counterparts. That would herald an easing of tensions between the embattled automotive groups and make life easier for Renault Chairman Jean-Dominique Senard. 

Yokohama-based Nissan on Tuesday picked Makoto Uchida as its CEO. The 53-year-old theology graduate is currently a senior vice president in charge of the company’s Chinese operations. He previously worked as a manager in the Renault-Nissan Purchasing Organization, at Korea’s Renault Samsung Motors, and as a corporate vice president for alliance purchasing at Nissan. 

His immediate priority will be to cut costs at Nissan, which will generate a measly $1.4 billion of operating profit from $100 billion of revenue in the current financial year, according to Refinitiv estimates. Japanese rival Toyota Motor’s operating margin will be six times higher. Uchida will also need to get Nissan growing again: in the most recent quarter, the company’s market share slipped in China, the United States and Europe compared with the full year ending in March 2019. Its revenue was down 13% year on year. His experience in the Chinese market, easily the world’s biggest, should help. 

His next job will be to iron out tensions with partner and 43% shareholder Renault. Progress on deepening the cost-sharing relationship has stalled since the exit of Ghosn, the longstanding steward of cooperation. Uchida’s experience at the shared alliance’s purchasing unit means he will have a deep knowledge of the benefits of collaboration. 

Crucially, his new chief operating officer, Ashwani Gupta, is also a Renault alumnus. Together they are likely to forge a more Renault-friendly strategy than Jun Seki who had been seen, according to Reuters, as a front runner for the CEO job. The Nissan lifer only had a recent, relatively short stint on an alliance project. A person familiar with Renault’s thinking told Breakingviews that Senard was pleased with the appointment. He is right to be celebrating.

Breakingviews

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