Nissan is dying and taking globalization with it

In retrospect, you can put a date on the moment globalization peaked: Jan. 24, 2018.

In the rarefied winter air of Davos, Switzerland, Carlos Ghosn — then boss of the sprawling alliance of Nissan Motor, Renault and Mitsubishi Motors — was asked what he thought of a tentative initial round of tariffs on washing machines and solar panels imposed by President Donald Trump.

Flush with the confidence of delivering sales results confirming the alliance was the world’s biggest car group by volume, and with his eye on a unification of the business under a single corporate roof, he seemed untroubled. "I don’t see anything that is going to lead to a heavy significant burst of protectionism,” he told Bloomberg Television.

The tectonic plates were already shifting. Within weeks, Nissan insiders had started the internal investigations that would lead to his arrest later that year and dramatic escape from Japan in 2019. The fractured group has since spent the best part of a decade trying and failing to finalize the separation of its French and Japanese limbs. With Nissan’s announcement of a ¥670.9 billion ($4.5 billion) loss Wednesday alongside a promise to close seven of its 17 factories, one of the world’s great carmakers may be approaching its endgame.

That’s certainly the judgment of investors. The stock is now trading like scrap metal, at less than a quarter of the value of the assets on its books. Its debt is also junk, in the view of all three major ratings companies. Its ¥1.3 trillion market cap is less than the ¥1.5 trillion value of its net cash. If you bought Nissan shares at almost any time since 1975, you would currently be sitting on paper losses.

New Chief Executive Officer Ivan Espinosa, just months into the job after his predecessor Makoto Uchida stepped down following an abortive merger attempt with Honda Motor Co., is touting the company’s third restructuring plan in five years. It’s mostly a reheated version of the last program Uchida put forward six months ago, before his departure. It won’t be enough to stanch the bleeding.

The opportunity to fix this was during the previous seven years, when the global car industry was undergoing its most dramatic revolution since the dawn of the internal combustion engine. But throughout that period, Nissan was consumed by the fratricidal bitterness left over from Ghosn’s ouster. Even now, roughly one-sixth of the latest annual results announcement was consumed with updates on his case.

That’s left the business stuck in the past. At that 2018 Davos meeting, Ghosn could claim to be running the world’s biggest maker of electric cars. Nissan has barely grown EV sales since.

Espinosa’s latest plans to revive its China unit seem like a bad joke, too: Sales there have fallen by about half since 2019. He’s hoping to turn this around with a focus on plug-in vehicles, but Nissan is starting from so far back it’s barely visible. The company sold 12,641 EVs and plug-in hybrids in China last year, giving it less than 0.1% of the local market and failing to crack the top 60 local new-energy vehicle brands.

Detroit has dealt with the turbulence of the past decade by retreating to its home market to lick its wounds. That won’t work for Nissan, which is still too global for the protectionist competitive landscape we’re living in.

It’s a Japanese business in name only: Despite accounting for 45% of jobs and about 35% of manufacturing assets, just 16% of sales are at home. More than half of revenues are in North America and about 30% of the vehicles produced in its Japanese factories are exported to the same market. Trump’s 25% tariff on auto imports are more than sufficient to wipe any profits from that trade.

Nissan’s revival since 1999 by a superstar French-Brazilian-Lebanese executive was a parable for the successes of globalization. Ghosn himself was felt for years to embody "Davos Man,” the globe-trotting bosses who made a pilgrimage to a Swiss ski resort for the annual World Economic Forum. Under the surface, though, nationalism never really went away. For all the purely corporate failures that led to its downfall, a shadowy proxy war between factions of the French and Japanese governments contributed just as much.

Its rivals don’t have much opportunity to enjoy the schadenfreude. A world where the major carmakers hibernate at home will be an unfriendly one for almost every national champion except those from China, the one place with the scale, manufacturing expertise and technological edge in EVs to dominate all others. The world’s best chance of holding back this competitive onslaught was to work together across borders. The collapse of Nissan extinguishes all remaining hope of that future.

New great powers typically rise to dominance while the old order squabbles obliviously. With auto companies, as with nation states, we’re seeing that pattern play out again.