Nissan board to discuss potential CEO successors at March 11 meeting, sources say

By Maki Shiraki, Daniel Leussink and Norihiko Shirouzu

TOKYO (Reuters) -Directors of Japan's third-largest automaker Nissan will discuss potential successors to CEO Makoto Uchida at a meeting on March 11, as his position has become untenable given the worsening performance of the company, three people familiar with the matter said.

Candidates being considered include Chief Financial Officer Jeremie Papin and Chief Planning Officer Ivan Espinosa, one of the people and a fourth person said, but neither are seen as a certainty, especially considering their association with current management missteps.

The next CEO could be installed as a temporary or transitional leader, an option that would give the board more time to find a permanent replacement, the fourth person said.

The people declined to be identified because the information has not been made public. A Nissan representative declined to comment. The March 11 meeting date was first reported by Kyodo News.

Chief Performance Officer Guillaume Cartier also was being considered alongside Papin and Espinosa, the Yomiuri newspaper reported.

Shares of Nissan gained 1.8% in Tokyo, outperforming a 2.2% decline in the Nikkei index.

Uchida's potential ouster follows the collapse last month of talks to merge with Honda.

The carmakers had been discussing a tie-up to create a $60 billion company but those negotiations were soon strained by disagreements, including over the balance of power between the longtime rivals.

The deal was ultimately sunk after Honda proposed making Nissan a subsidiary, Reuters has reported.

There is now speculation that Nissan could look to tie up with Taiwanese electronics company Foxconn, which has a nascent electric vehicle business headed by a former Nissan executive, Jun Seki.

Seki has been mentioned by domestic media as potential successor if Nissan were to tie up with Honda, Foxconn and Mitsubishi Motors through a four-way deal.

The turmoil at the top of Nissan is the latest turn in a long-running drama that was sparked by the ouster of former Chairman Carlos Ghosn in late 2018 and would mean the fourth CEO in less than six years.

While legacy automakers face a profound threat from Chinese EV makers, which have upended the industry with sleek, software-rich cars, Nissan is facing much deeper structural challenges than most rivals, having never fully recovered from the years of crisis and management turnover brought by Ghosn's exit.

For years it focused on volume over value, eroding its brand image. Despite being an EV pioneer with the Leaf, it never enjoyed the boom or profits of Tesla.

It also misread demand for hybrids in the United States, a costly mistake it is now scrambling to fix. Now it faces potential tariffs on vehicles it exports to the United States from Mexico, a major manufacturing hub.

JUNK STATUS

Fitch Ratings last month cut Nissan's rating to "junk", snuffing out its last remaining investment-grade status from a major credit rating agency and highlighting the automaker's "persistently low" profitability and the uncertainty surrounding its turnaround plan.

Nissan has some 1.8 trillion yen ($12.2 billion) in bonds outstanding, according to LSEG data, with 233 billion yen worth of bonds coming due this year. It has plenty of cash and a strong balance sheet, but analysts have repeatedly pointed out the potential for longer-term pain if it cannot turn its business around.

Nissan has previously had interim leaders. In 2019, the automaker installed company veteran Yasuhiro Yamauchi as interim CEO following the ouster of Ghosn's successor Hiroto Saikawa.

The denouement for Uchida was first flagged by Reuters in December, when a source said that subsequent months would be critical for his and Nissan's future.

Uchida has said that ending the malaise at Japan's third-biggest automaker was the most pressing issue for him to tackle, after which he would be willing to bow out.

($1 = 147.5400 yen)

(Reporting by Maki Shiraki and Daniel Leussink in Tokyo and Norihiko Shirouzu in Austin, Texas; Editing by David Dolan, Jamie Freed and Kim Coghill)