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Nissan's Ghosn Gives Up U.S. Duties After Goal Cut

From bloomberg| March 19,2007

Nissan Motor Co. Chief Executive Officer Carlos Ghosn will give up oversight of North American operations after Japan's third-largest carmaker missed its profit forecast for the first time in seven years.

Ghosn, who heads both Nissan and Renault SA, will hand over responsibility for operations in the Americas to Executive Vice President Hiroto Saikawa, who is also in charge of purchasing, the carmaker said in a statement on its Web site.

Handing over day-to-day control of North American operations will give Ghosn more time to focus on a plan to be announced next month that will tackle what he's called a ``crisis'' at Nissan. Ghosn, who became Renault's CEO in 2005, is simultaneously trying to double the French carmaker's operating margin to 6 percent in 2009.

``Ghosn revived the company by running flat out, but he has pushed himself and employees to the point of exhaustion,'' said Koichi Ogawa, who helps oversee $28 billion at Daiwa SB Investments Ltd. in Tokyo. ``The company's sales are doing poorly.''

Nissan cut its earnings forecast for the current year in February due to weaker-than-expected sales in the U.S. and Japan. The company also plans to cut production at two of its factories in Japan from April 2 until the end of June because of weaker domestic demand.

``We will take into consideration that this year we missed our forecast'' when it comes to deciding on new management, Ghosn said in an interview on Feb. 2. ``We have to put more energy into management.''

Share Performance

Shares of Nissan fell 0.9 percent to 1,285 yen at the close of trading in Tokyo. The shares have fallen 5 percent over the last 12 months compared with a 21 percent gain for Toyota Motor Corp. and a 16 percent increase at Honda Motor Co. Renault shares have gained 4.1 percent in the period compared with a 77 percent increase at Volkswagen AG. Nissan owns 15 percent of Renault.

Chief Operating Officer Toshiyuki Shiga will focus on Japan and shift responsibility for general overseas markets to Senior Vice President Colin Dodge. From April, Ghosn will directly oversee the company's treasury, which had been overseen by Shiga. Ghosn will continue to spend half of his time at Nissan and the other half at Renault, Nissan said.

Saikawa, 53, previously was in charge of Nissan's European operations and ran joint purchasing for Renault and Nissan. He has worked at Nissan since 1977.

``Top management seems to be too stretched,'' said Yoshihiro Okumura, who helps manage $365 million at Chiba-gin Asset Management Co. in Tokyo. ``Nissan faces a lot of problems and these changes will hopefully help them focus.''

Domestic Market

Nissan's domestic vehicle sales, excluding minicars, fell for a 17th straight month in February as customers are opting for vehicles with smaller engines. Nissan, which exports fewer vehicles to North America than rivals Toyota and Honda, is more dependent on the domestic market.

``The fiscal first quarter will be the toughest part for Nissan,'' said Kurt Sanger, a Tokyo-based analyst at Macquarie Securities Ltd. who rates Nissan shares ``outperform.'' ``Nissan will renew some models for export in the second half, which will help its production go up.''

The automaker will cut one shift on one of its production lines at its factories in Kanagawa and Tochigi prefectures, said Nissan spokesman Yuichi Nakagawa in Tokyo. The plants each have two production lines.

Nissan's Plan

Nissan will announce a plan in April in response to missing its goal. The Tokyo-based carmaker, 44.3 rcent owned by Renault, will probably focus on cutting costs further in purchasing, making better use of its production capacity, and strengthen sales and marketing efforts especially in Japan and the U.S., said analysts including Koji Endo at Credit Suisse Group in Tokyo.

The automaker is adding Senior Vice Presidents Colin Dodge and Junichi Endo to its executive committee, where major business decisions, such as building a new factory, are made. From April, Nissan will have nine executive committee members up from seven. The appointment changes are effective April 1, the company said.

Nissan announces management changes before April every year.

Ghosn, 53, who was dispatched from Renault in 1999, led Nissan from a record loss to six consecutive record profits after becoming president in 2000.

Last month, the carmaker cut its full-year profit forecast 12 percent to 460 billion yen from 523 billion yen.

Nissan will probably miss its 3.73 million global vehicle sales forecast for the year ending in March, Ghosn
said last month.

``It's not in the culture in Nissan to miss forecasts,'' said Ghosn last month.

Old Models

Nissan didn't introduce any new Nissan-brand vehicles for 15 months and went 18 months without any new Infiniti-brand models in the U.S., its most profitable market. During that period, rivals Toyota Motor Corp. released the fully redesigned Camry sedan and Yaris compact car, while Honda Motor Co. introduced revamped CR-V and Acura MDX sport-utility vehicles in the U.S.

In the second half of this fiscal year, Nissan started selling the new Versa compact car and redesigned versions of the Sentra and Altima sedans in the U.S. Nissan is betting on 11 new or redesigned vehicles that it plans to introduce globally in the year starting April 1, including the Rogue small crossover, Ghosn.

``We are expecting fiscal 2007 to be better than fiscal 2006 from sales to net income,'' said Ghosn last month.

 

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