Nov. 2 (Bloomberg) -- Being No. 2 to Carlos Ghosn, chief executive officer at Nissan Motor Co. and Renault SA, is no longer the exclusive job it used to be.
Ghosn yesterday announced he’ll get rid of Nissan’s chief operating officer position -- currently held by Toshiyuki Shiga -- two months after doing so at the French carmaker he also runs. Following the management overhaul, Ghosn’s No. 2s will be four executive vice presidents at Yokohama, Japan-based Nissan.
The overhaul comes as Nissan, Japan’s second-largest automaker, scales back its profit outlook at a time when the weaker yen is bolstering the nation’s exporters. While Ghosn said the elimination of the COO job is a sign of the company’s maturity, the move also indicates the fate of Nissan and Renault will increasingly depend on one man.
“Maybe Mr. Ghosn wanted to set up a single straightforward chain of command at Nissan instead of having two captains at the company,” said Yuuki Sakurai, chief executive officer of Fukoku Capital Management Inc. “Whether or not this will be good for Nissan is difficult to say. Mr. Ghosn has changed many things at Nissan and some have worked and some have not.”
Under the management changes announced yesterday, Shiga, 60, will step aside to become vice chairman and remain on the board. The COO void will be filled via three new positions -- reporting directly to Ghosn, according to the company. Nissan, the maker of Infiniti luxury cars, will also reorganize its operations to six regions from three now, breaking out markets such as China.
Nissan announced the management overhaul changes yesterday as the company pursues an operating profit margin target of 8 percent by the year ending March 2017. The automaker cut its full-year profit forecast by 15 percent after demand in emerging markets slowed and recall costs mounted. The automaker also lowered its forecasts for operating profit and revenue.
The company expects to post net income of 355 billion yen ($3.6 billion) in the year ending March 31, it said yesterday. That’s below the Yokohama, Japan-based carmaker’s previous forecast of 420 billion yen and the 440.3 billion yen average of 18 analyst estimates compiled by Bloomberg. Profit is still projected to rise from the previous year as the weaker yen helps bolster earnings.
Among Ghosn’s new lieutenants will be Executive Vice President Hiroto Saikawa, 59, who will be chief competitive officer overseeing the supply chain, research and development, as well purchasing and manufacturing, Nissan said. Executive Vice Presidents Andy Palmer, 50, and Trevor Mann, 52, will also take on positions as chief planning officer and chief performance officer, respectively, the company said.
Colin Dodge, 58, currently executive vice president, will take on a new role managing special projects and report directly to Ghosn. Kimiyasu Nakamura, president of Chinese joint venture Dongfeng Motor Co., will assume companywide responsibility for customer satisfaction, reporting to Saikawa.
“Nissan did not have the role of COO up to 2005,” Ghosn said in an interview yesterday. “We created the role of COO at the moment where I had to divide myself between Nissan and Renault. But we don’t have to work like this.”
The executive reassignments are similar to what Ghosn did at Renault. Earlier this year, Ghosn dropped the COO position at the French company after Carlos Tavares resigned and promoted internal executives to two newly created positions.
Nissan will announce further appointments for Europe, Africa, Middle East and India in the coming weeks, it said.
On Nissan’s reduced financial outlook, the company also cited unfavorable exchange rates in emerging markets, such as the Indian rupee. The company reduced its full-year global sales forecast to 5.2 million units, compared with an earlier forecast of 5.3 million.
Ghosn said the company was sticking to its mid-term targets and that the current problems with emerging markets won’t be long-lasting.
Nissan said on Sept. 26 it would recall 910,000 vehicles globally, including the Serena minivan and X-Trail SUV, over an accelerator glitch. The recall will cost the company about 15 billion yen, weighing down the company’s quarterly profit, according to Kota Yuzawa, an analyst with Goldman Sachs Group Inc. in Tokyo.
“If this is a one-off and if it’s contained, and if all adjustment occurs in this quarter, then that’s not necessarily bad news for the share price,” said Ashvin Chotai, managing director at Intelligence Automotive Asia in London. “But it depends on the explanation of the company so this is something to look at.”
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