Tokyo: Nissan Motor Co., Ltd scrapped bonuses for its nine top executives after profit dropped for the first time in seven years and the company was overtaken as Japan’s second-largest auto maker by Honda Motor Co. Ltd
“We missed our forecast and we are taking this responsibility seriously,” said chief executive officer Carlos Ghosn, who also won’t get a bonus, at a shareholders’ meeting in Yokohama.
In the year ended March 2006, the auto maker paid a total of 390 million yen (Rs12.87 crore) to seven executives.
Ghosn, who rescued Nissan from near-bankruptcy in 1999 and led the company to six consecutive record profits, has staked his reputation on meeting this year’s forecast. He reiterated on Wednesday that net income will rise 4.2% with the introduction of new models.
“It’s a symbolic way of taking responsibility,” said Yoshihiro Okumura, a general manager at Chiba-gin Asset Management Co., which manages the equivalent of $365 million (Rs1,497 crore) in assets.
“But achieving this year’s forecast looks tough. Looking at sales in the US so far, it seems they’re off to a late start,” Okumra said.
Tokyo-based Nissan expects net income will rise to 480 billion yen ($3.9 billion) in the 12 months ended 31 March 2007, from 460.8 billion yen a year earlier. Sales will probably fall 1.6% to 10.3 trillion yen. The car maker expects to sell 3.7 million vehicles this business year.
Ghosn said higher than expected tax costs in the fiscal first quarter would not prevent the company from meeting its earnings goal.
Shares of Nissan, 44.3% owned by Renault S.A., gained 0.8% to 1,351 yen at the close of trading in Tokyo. Ghosn said Nissan’s shares are undervalued. Nissan missed earnings and sales forecasts last year after a lack of new models in the US and Japan, its two biggest markets.
Nissan also delayed its goal of selling 4.2 million vehicles worldwide by a year, to the 12 months ending March 2010.
The car maker paid its top nine executives 2.52 billion yen in salaries in the year ended March, which a shareholder said was excessive compared with salaries at Toyota Motor Corp. “I don’t think it’s excessive on a global basis,” said Ghosn. “We are a global company and just because our executives work hard in a different country, it’s not fair for our executives to be paid less than those in Europe or in the US.”
Separately, Ghosn told reporters that Nissan was not interested in buying Ford Motor Co.’s Jaguar or Land Rover units. Ford is conferring with investment bankers about options for the luxury brands.
Ghosn also said Nissan may introduce a $3,000 car for India if a competitor does it first.
The car maker didn’t introduce any Nissan-brand vehicles for 15 months and went 18 months without any new Infiniti-brand models in the US, its most profitable market. During that period, Toyota released the fully redesigned Camry sedan and Yaris compact car, while Honda introduced revamped CR-V and Acura MDX sport-utility vehicles in the US.
From April, Ghosn gave up daily oversight of North American operations. The change is giving Ghosn, who heads both Nissan and Renault, more time to focus on improving performance at the two auto makers.
Growth in the US auto market may slow this year, Ghosn said in April, meaning Nissan has to increase market share to meet sales goals. It plans to win customers from rivals including General Motors Corp. and Ford by introducing 11 new or redesigned models globally in the year started 1 April.
“Ghosn is eager to improve his credibility this year and he probably will be able to because sales and profit are expected to rise,” said Yasuhiro Matsumoto, a senior analyst at Shinsei Securities Co. in Tokyo. “It’s also a good move for the auto maker not to pay its top executives bonuses.”
The auto maker improved sales in the US, where its market share rose 0.1 point to 6.5% in the first five months of 2007. GM had a 0.6 point drop while Ford’s share declined by two points.