Will Carlos Ghosn be unemployed soon?

Now Carlos Ghosn, 55 years old of Nissan Motors Co., who was once called “God of company reconstruction”, is now facing the risk of losing his job. The company announced on the 12th an annual net loss for the fiscal year ended March 2009. After the world-wide recession, their debt has increased to $2.3 billion and the net loss for the next fiscal year is estimated to be $1.7 billion. The company’s finances are deeply in the red and the situation is dire. If the company is going to have massive losses for two years in a row, the downfall of this charismatic icebreaker is now expected and now there is a possibility the company might have to cut this cool-headed “Cost-cutter” out.

This is the first time in 9 years, after Nissan marked a deficit for the fiscal year ended March 2000 and the first time since Ghosn became the Chief Executive. Although all auto business is largely and directly affected by the recession, this expectation of the 2 years’ massive loss shows that Ghosn was not a “God” but only a human being.

Not only the auto business, but all Japan’s economy is in the middle of a downturn. A sense of uncertainty about the future of consumption is still strong, and especially in big companies that cannot adapt quickly to new circumstances, they are at high risk of prolonged slow performance. The consolidated result of the fiscal year ended in March 2009 of the major 8 car manufacturers in Japan was announced and because of the sluggish sales and high yen, 5 of them: Toyota, Nissan, Mazda, Mitsubishi and Fuji fell into debt from the net losses. The profit of the other 3 including Honda has also been dropped dramatically. Also, Nissan, Toyota, Mazda and Fuji are expecting big losses again for the fiscal year through March, 2 years in a row. 2 big mini-car companies Suzuki and Daihatsu remained in surplus, thanks to relatively steady domestic sales. Honda is doing just OK because of the sales of motorbikes.

Nissan made a $4.8 billion surplus in the first half of the year but their sales of new cars in 2008 has dropped to 3.41 million cars, 9.5% less than the previous year. In the USA, their main market, the sales have dropped by 20% and are 15% less in Japan and Europe and the 2009 sales are expected to be 9.7% less to 3.08 million cars. Ghosn could not say any more than “We expect more sales in the second half of the year than the first half”. He also denied the rumor of them buying some brands off USA giant General Motors (GM). Also, about the business tie-up with US Chrysler who is going to try reconstruction with the capital injection from Fiat, he said “If they are going as an independent company, we would consider the tie-up but if they are going to be a child company, we would have to think about it again”. He indicated the possibility of calling it off in the future.

The sales of all 8 manufacturers have dropped a lot less than the first half of the year and Nissan was easily the worst of all with the loss of 22.1%, $80 billion.

Ghosn is going to cut the production cost by sharing engine and parts with his old company Renault and turn into “self-protection mode” in the country, but how is he going to explain this so that the shareholders accept his suggestion? Feeling the chill of the axe on the back of his neck, Ghosn is preparing for the next general shareholders meeting, which is not far away.



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