This is an audio transcript of the FT News Briefing podcast episode: ‘Nissan pushes CEO out’
Marc Filippino
Good morning from the Financial Times. Today is Wednesday, March 12th, and this is your FT News Briefing. US equities were all over the place on Tuesday. And Nissan is paving the way for a new CEO. Plus, Citigroup is trying to dominate the buy now, pay later field, but . . .
Stephen Gandel
It’s kind of like, you know, Blockbuster trying to go into streaming, right? This isn’t their main business.
Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.
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It was like we saw two completely different stock markets yesterday. In the first part of the day, the S&P 500 entered correction territory, meaning it had fallen 10 per cent since its peak that it hit less than three weeks ago. The correction came after the US announced it would double the tariffs on steel and aluminium imports from Canada. White House press secretary Karoline Leavitt defended the moves.
Karoline Leavitt voice clip
First of all, when it comes to the stock market, the numbers that we see today, the numbers we saw yesterday, the numbers we’ll see tomorrow are a snapshot of a moment in time. And as President Trump has said, we are in a period of economic transition.
Marc Filippino
But Tuesday’s market activities had a dramatic Act II. By the closing bell, the S&P 500 had a major bounce back, but still ended the day down three-quarters of a per cent. The rebound happened around the same time as the news that Ukraine is willing to sign a 30-day ceasefire with Russia. Washington would restore military aid and intelligence sharing with Kyiv as part of the deal.
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Nissan CEO Makoto Uchida is getting out of the driver’s seat. In a press conference on Tuesday, the car manufacturer said that Uchida will step down on April 1st. He’ll be replaced by the current chief planning officer, Ivan Espinosa. It comes after the company reported dismal results and takeover talks with Honda collapsed last month. Joining me from Tokyo to talk about it is the FT’s Harry Dempsey. Hey, Harry.
Harry Dempsey
Hey.
Marc Filippino
So do me a favour. First off, just give us some background on Uchida being ousted. How has Nissan done under his tenure?
Harry Dempsey
So if we go back to 1999, Nissan has basically been in a permacrisis since then. And at that point, Carlos Ghosn took over and he ran the company for 20 years, and he was cutting a lot of the costs out of the company. But the financial performance was good. And then Makoto Uchida took over in 2019 and the company faced many, many issues. So there was infighting in the wake of Carlos Ghosn leaving, but there was also coronavirus, semiconductor shortages, and then the Ukraine crisis. So the auto industry has faced problem after problem. But layered on that, Nissan has had lots of its own issues and it’s had to rebalance its alliance with Renault. And it’s come to head in the last year that Nissan really has failed to invest in its future. This year there’s been three profit downgrades, and I think it’s really become clear that Uchida had run out of road.
Marc Filippino
So Harry, remind me and listeners why those takeover talks with Honda fell apart.
Harry Dempsey
So in December, Nissan and Honda started talking about merging. And the backdrop of the threat was that Taiwan’s Foxconn had approached Nissan about taking a stake in the business. And so Japan Inc was worried about Nissan being taken out of Japanese ownership. And so Honda moved it to try and bring these two companies together. And initially, they had thought about putting the two companies together under a holding company, but then Honda pivoted to say it needs full control of Nissan as a fully owned subsidiary. And Nissan baulked at that idea. Uchida didn’t like it, and the takeover talks, they collapsed then within just over 40 days. So it’s in the wake of those takeover talks collapsing and there being no clear partner for Nissan going forward into the future that Uchida leaves the company.
Marc Filippino
That brings us to Ivan Espinosa, who will be replacing Uchida. What’s he like and what’s his background? And do we think that Honda’s gonna like him?
Harry Dempsey
So Espinosa, he’s currently the company’s chief planning officer, but his background is really in the products. The signal that I would guess Nissan is trying to send is that we believe that Nissan does have the right things within the company. It just needs the guy who understands the products to be at the top of the company and really bring that out for customers. And it also perhaps represents a break from the current management. And so I think it could potentially be sending a message to Honda that they might not want to potentially enter back in discussions. But Espinosa was asked in the press conference on Tuesday whether he would be open to re-entering discussions with Honda about a merger. And he declined to comment on it. So that really is still an open question.
Marc Filippino
Harry, where do things go from here? What are you looking for next?
Harry Dempsey
So I think in the near term, Nissan is trying to execute a turnaround plan which involves cutting 9,000 employees, shutting down 20 per cent of production capacity. You know, this is quite a radical takeover plan. So I think in the short term, can Espinosa deliver on this turnaround plan? And can Nissan start to boost sales? I would then say the second thing to look out for is: what will the impact of Donald Trump’s tariffs be? Because Nissan, it’s one of the biggest car producers in Mexico. And compared to other automakers, it’s got much less wiggle room to absorb or cope with any extra costs that come from tariffs. And third is the company needs a partner in the long term. So I think that long-term future for Nissan, that’s the big question.
Marc Filippino
Harry Dempsey is the FT’s Tokyo correspondent. Thanks, Harry.
Harry Dempsey
Thanks.
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Marc Filippino
Citigroup has a plan and it’s to be the top dog in this space called buy now, pay later. That’s the online instalment payment service that customers use when they can’t pay the whole amount immediately. But Citi is entering a crowded space and a big player has an initial public offering looming. The FT’s outgoing US banking correspondent Stephen Gandel is here to talk about this. Hey, Stephen.
Stephen Gandel
Hi.
Marc Filippino
So Stephen, where is Citigroup’s buy now, pay later — or, you know, it’s called BNPL for short — where’s this program at now?
Stephen Gandel
They launched it about a year ago. It’s available in a little over 100 retailers that they’ve partnered with. And so it works out if you go to, let’s say Home Depot, that’s one of Citi’s retailers that they’ve partnered with. You go to Home Depot and you go to buy something there. And even if you’re not a Citi client, there’ll be a question at checkout and they’ll say, well, you could pay for this for now, but would you like to pay for it over time?
Marc Filippino
What is, just out of curiosity, what does BNPL offer to customers that maybe a credit card doesn’t? ‘Coz it’s, you know, well I’ve got credit cards (Marc laughs).
Stephen Gandel
Right. And you can pay credit cards over time. The difference is interest. For most buy now, pay later loans, they’re interest-free. There’s a fee that’s associated with providing the service, but usually the retailer will pay it. It’s something that they do to try to get more sales. And so most buy now, pay later loans are split over four payments, four monthly payments. And as long as you meet those payments you don’t pay any interest, which is great. It’s a great savings for consumers who are used to paying credit cards. And recently the credit card interest rates have been quite high.
Marc Filippino
How does Citi wanna go about dominating BNPL?
Stephen Gandel
They have a different offering than these upstarts that they’re going after, which is Klarna and Affirm and Afterpay. The model for the fintech upstarts are very specific to a particular purchase. When you’re going to buy something, at checkout again or online, instead of pay for the item right now, you’d like to do it over time using a buy now, pay later loan. Citi, because it’s partnered with well over 100 retailers, they’re gonna give you a credit line on buy now, pay later that you can use at a number of different places. And you can track your buy now, pay later loans across a number of retailers.
The other thing that’s a big part of Citi’s strategy, which is different than the others, is they wanna be a more responsible lender than some of these buy now, pay later upstarts. Generally, the fintechs that are in the business right now, they don’t do credit checks, and they also don’t report how you do on these loans back to the credit rating agencies. And so Citi plans to underwrite these loans more like what you would for a typical loan. And this may be very attractive for retailers to partner with Citi, because they don’t wanna sell to people who can’t end up paying things. They don’t want people stuck in debt, right? They want customers who end up happy with their product.
Marc Filippino
What are some of the biggest obstacles that Citi might be facing?
Stephen Gandel
The biggest obstacles are that it’s kind of like, you know, Blockbuster trying to go into streaming, right? This isn’t their main business.
We had news recently that one of the hot start-ups in this area, which the banks are concerned about, Klarna is going to go forward with its IPO, and it’s gonna maybe value the company at about $15bn, and their whole purpose for being is to introduce people to buy now, pay later, allow them to manage their finances in a way they haven’t managed before.
Citi, like some of the other banks are, you know, they’re playing defensive. They don’t wanna blow up their existing credit card business. And Citi and the other large banks, they have an advantage because they have experience doing underwriting, but they have a disadvantage because they don’t have as much experience in the kind of app world and online space and social media life that these fintechs know very well.
Marc Filippino
Stephen Gandel is the FT’s outgoing US banking correspondent. Thanks, Stephen.
Stephen Gandel
Thank you.
Marc Filippino
You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
