Nissan CEO Carlos Ghosn has refused to resign after net profits slipped for the first time under his command. "As long as I have the shareholders' trust and the employees' trust, I will remain," he said at the hostile shareholders conference in Yokohama.
Ghosn, who rescued the then-struggling Japanese automaker, joined Nissan in 1999. He was the first foreigner to lead a major Japanese company and winning over a loyal fan base by pushing Nissan from bankruptcy to rewarding profits. But now the man of who gathered praises a few years back is confronted by a small-level shareholder who called on him to quit over the last earnings report. Ghosn said to them: "A failure? The fiscal year 2006 is one of the best results Nissan has ever achieved!" He is holding on to his post as if fastened by ever-efficient .
The net profit of the third largest Japanese automaker dropped by 11.1 percent in the fiscal year to March 31 - the first time the company failed to meet its targets since Ghosn's arrival. The fall came just after Ghosn took over as CEO of Renault, which holds a controlling stake in Nissan. Ghosn has since divided his time between Japan, France and the US.
Ghosn has tackled the "performance crisis" at Nissan and taken a series of measures in recent months that included reshuffling top management and laying off 1150 workers in a restructuring of the commercial division in Japan. Another 1,500 jobs are expected to be slashed at Japanese factories through voluntary retirements.
Ghosn said, "We have to recognize our failure, to analyze it and to react." But he told the shareholders assembled to put the problems in perspective. "They are very small compared to the problems we had in 1999; the negative articles we are reading today are a piece of cake compared to those in 1999, 2000 and 2001," he added. "Nissan is still a hugely profitable company, let's not forget about that," he said. "I understand and I share your frustration."
Ghosn has faced particular criticism from shareholders for his open skepticism about hybrid technology which was pioneered by Japanese rivals Toyota Motor Corp. and Honda Motor Co. In late 2005, Nissan announced that it was working on its first hybrid vehicle to meet demand but Ghosn has insisted the cost benefits of the cars have not been proven.
"The hybrid is still a niche technology today," he said. "It's a fact. The numbers show it." He said hybrids were pitted 'head to head' in the US market against new, clean, diesel technologies which Nissan was also working on. "When you go to the market, the decisions are going to be a function of the customers' reaction to the two technologies," Ghosn noted. "Frankly, it is not obvious today."
Hybrid vehicles, which run on a conventional gasoline engine mated to an electric motor, consume less fuel and are deemed environmentally friendly. Nonetheless, hybrid vehicles are costly. For the 2007 model year, Nissan entered an agreement with Toyota to utilize some of its hybrid technology in the new Altima. The Nissan Altima Hybrid Electric is the first hybrid car from the Japanese company. The Hybrid Altima features the QR25DE engine, CVT and electric motor.
At present, the company envisions that upcoming hybrid models will be based on in-house hybrid technology this is why the automaker is expanding its research and development division.
Separately, Nissan Europe reported that it has signed an agreement to acquire 100 percent of the shares in Nissan Belgium. But the same is still subject to the approval of the Belgian Competition Board.
