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Nissan's Ghosn Drops U.S. Duties Amid Earnings Slump

Reuters
Friday, 16 Mar 2007 | 10:49 AM ET

Nissan Motor said on Friday that Chief Executive Carlos Ghosn would give up the duty of overseeing the Americas as the automaker heads for its first annual profit decline in seven years.

The shuffle is aimed at crafting a more effective management structure and mending the carmaker's struggling domestic and North American operations, the company said.

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Under the changes, effective April 1, Hiroto Saikawa, now an executive vice president accountable for the European market, will take over the Americas from Ghosn, who will focus on heading Nissan and its partner, Renault.

Chief Operating Officer Toshiyuki Shiga will no longer be responsible for the general overseas market, focusing instead on Nissan's embattled Japanese business.

Ghosn, known for his success in turning around companies, is under pressure to jump-start stalled momentum at both Renault and Nissan after disappointing profits and sales over the past year.

Last month, Ghosn promised to draw up additional measures to help Nissan meet its targets under a three-year plan after the company forecast its first full-year earnings drop under his watch. That announcement is due next month.

"The priority for our new management team is to act decisively on the multiple challenges facing Nissan and to boost our overall performance in 2007," Ghosn said in a statement.

In response to a sharp slide in its domestic sales, Japan's third-biggest automaker said on Friday it would cut back production at two domestic car plants for three months starting next month.

Shift to Fuel-Efficient

Japan's market for full-sized and compact cars has been on a steady decline as demand shifts to fuel-efficient 660cc minivehicles, but Nissan has suffered bigger drops than its rivals due to a slim line-up of new models.

For the first two months of this year, Nissan's sales of non-mini vehicles in Japan fell 16 percent to 100,623 units, while the overall market shrank by 9.4%.

Its minivehicle sales surged 24 percent in the same period, but those are supplied by Suzuki Motor and Mitsubishi Motors.

To adjust inventory levels, Nissan said production would move to a single shift from two shifts between April and June at the Oppama and Tochigi plants, which assemble about a dozen models ranging from the March subcompact to the Infiniti Q45 sport utility vehicle.

Nissan, which is 44% owned by Renault, declined to say how many vehicles would be lost. The two plants have a combined annual output capacity of about 740,000 units.

But a spokeswoman said production in Japan for the export market as well as output overseas would rise in the new business year starting next month, resulting in a net increase in global production for 2007/08.

Nissan also closed down one of three lines at another factory in Kyushu, southern Japan, last September due to slow sales of the Teana high-end sedan.

Under the planned management reshuffle, Colin Dodge, a senior vice president in charge of manufacturing and purchasing, will join the management committee to take COO Shiga's place heading the general overseas market, which excludes Japan, North America and Europe.

The latest changes will add two members to the seven-man executive committee.

Shares in Nissan ended down 0.9% at 1,285 yen as auto stocks fell on a stronger yen, which generally hurts exporters. The transport sector subindex lost 1.1%.

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