Nissan Getting Ready to Replace CEO Uchida Following the Fail of Honda Deal

Nissan Motor Co. is planning to replace its CEO following another disappointing earnings report and the collapse of talks to merge with Honda Motor Co.

Nissan directors are gauging interest in potential candidates for success. Makoto Uchida, the 22-year company veteran who has been CEO since late 2019, one of the people said, requesting anonymity because the discussions are private. Nissan declined to comment.

Uchida, 58, told reporters earlier this month that, while he was willing to step down if asked, he did not want to do so until Nissan's business was stable. He forecasted a net profit of ¥380 billion just nine months ago, but now expects a net loss of ¥80 billion ($536 million) for the fiscal year ending March.

Nissan is facing a record debt bill due next year, and all three major credit rating agencies have downgraded its ratings to junk, following two downgrades in the last week. Late last year, Uchida reached out to Honda for assistance, and the two companies tentatively agreed to merge under a joint holding company. After disagreeing on terms, the automakers called off their negotiations this month.

Executives from Honda and Nissan said they would continue to collaborate on electric-vehicle batteries and software development with Mitsubishi Motors Corp., a third Japanese peer. During a press conference on February 13, Uchida was clear about how important partnerships will be for Nissan's future.

"It will still be difficult to survive without leaning on future partnerships," he told the press.

Nissan is having trouble attracting customers with its dated product lineup, and it has had to spend heavily on incentives and promotions to reduce inventory. Uchida announced plans in November to cut 9,000 jobs and a fifth of the company's production capacity.

Finding a way forward will be challenging.

Nissan's largest shareholder and longtime alliance partner Renault SA was critical of Honda's hard bargaining over how their merger would be structured, and praised Nissan for walking away. Meanwhile, Renault has sought to distance itself from the company, with CEO Luca de Meo stating that China's Zhejiang Geely Holding Group Co. may be a better long-term partner than Nissan.

Hon Hai Precision Industry Co., also known as Foxconn, approached Nissan about acquiring a stake in the company in December and announced this month that it was willing to buy Renault's 36% stake. The Taiwanese contract manufacturer is attempting to establish a foothold in EV manufacturing but has had difficulty convincing car manufacturers to outsource production.

Separately, Bloomberg News reported earlier this month that US private equity firm KKR & Co. was considering an equity or debt investment to help Nissan improve its financial position.