(Bloomberg) -- Makoto Uchida’s five-year anniversary as president and chief executive officer of Nissan Motor Co. is little cause for celebration among shareholders.
The carmaker’s stock has performed worse during his time at the helm than under any other leader in at least five decades, data compiled by Bloomberg show. Shares have also lagged those of the company’s global peers.
Nissan’s stock has fallen 47% since Uchida became CEO on Dec. 1, 2019, underperforming Japan’s Topix by more than 100 percentage points. By this measure, he’s the company’s worst-performing president since at least 1974, from when Bloomberg data are available.
Uchida has had to steer the company through huge challenges in the past five years. When he took charge, Nissan was still reeling from the arrest and escape from Japan of former chief Carlos Ghosn. Now, it’s confronted with the rise of China’s electric vehicle makers, which have shaken up the auto industry worldwide.
Nissan shares have lagged the MSCI World Automobiles Index by more than 170 points under Uchida — the worst relative performance by any CEO since the global benchmark launched in 1999.
In Uchida’s time as chief, Nissan’s sales have shrunk, its profits have plunged and its price-to-book ratio has declined to the lowest among Japan’s top-500 listed companies. The carmaker’s bad fortunes have now made it a target of activist investors, with a fund linked to Effissimo Capital Management found to have taken a stake in November.
In another blow, Nissan’s chief financial officer, Stephen Ma, is said to be stepping down, leaving Uchida as the company’s only top-level C-suite executive, after chief operating officer Ashwani Gupta left last year.
The carmaker’s shares closed 0.4% higher on Monday after the Ma news, compared to a 1.3% rise in the Topix.
A representative for Nissan declined to comment on the company’s share performance.
“Management has made a lot of mistakes,” said Julie Boote, a senior analyst at Pelham Smithers Associates. An outdated product lineup, lack of attractive hybrid offerings in the US and slow development of new models are at the core of the maker’s struggles, she said.
To address plummeting income, Uchida unveiled a plan to slash costs, including cuts to jobs, production capacity and earnings outlook last month. The measures resemble “a copy-and-paste job from the ‘Nissan NEXT’ plan in 2020,” which involved similar cost-cutting methods, said Boote.
Nissan’s credit-default swap rates widened to 209 basis points, the highest in more than two years, on Monday, after Moody’s Ratings and Fitch Ratings downgraded their outlooks to negative on the company’s murky prospects in the US.
Nomura Securities Co. also cut its Nissan stock rating to neutral from buy last week, on the view stabilizing earnings will take time.
Ghosn’s Legacy
The tenures of Uchida and his predecessor, Hiroto Saikawa, under whom shares declined 37%, stand in stark contrast to the climb Nissan enjoyed under forebear Ghosn. The stock rose 98% during his 17 years at the wheel, outpacing the Topix by 99 points. Shares beat the MSCI global auto index by 52 points in that period.
“Ghosn was very focused on increasing market share and sales, but that came at the expense of quality and margins,” said Boote. “It’s fair to say that Ghosn’s legacy is still hurting the current management.”
Hot competition from Chinese carmakers and rising pressure on Japanese manufacturers to accelerate EV production mean that Uchida and Saikawa have also faced market challenges that predecessors did not.
Yet even compared with domestic peers, Nissan has lagged. Its shares have underperformed Mazda Motor Corp., Honda Motor Co. and Toyota Motor Corp. by at least 25 points since Saikawa took charge in April 2017, according to data compiled by Bloomberg.
Uchida’s job is only likely to get harder in 2025, amid activist shareholder pressure and higher US tariffs from the incoming Donald Trump administration, Boote said.
“If activists are really interested in turning around the business, the first step would be a management overhaul,” she said.
--With assistance from Nicholas Takahashi.
(Updates with Monday’s stock move, CDS detail)
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