Pride can fuel innovation, but in Nissan’s case, it slowly became the blind spot that led to risky decisions, broken partnerships, and financial chaos, and in this story of ambition versus reality, you will see how the same confidence that built the brand also pushed Nissan toward bankruptcy.
Ghosn’s Initial Salvation and Subsequent Betrayal:
To understand how Nissan ended up in this position, we need to go back to the late 90s. Nissan was drowning in thirty-two billion dollars of debt. Its market share had collapsed, and its earnings were swinging up and down. The timing could not have been worse, because the 1997 Asian Financial Crisis crushed consumer demand. Nissan and its competitors were losing money and piling on debt. Even Toyota was struggling.
Then came Nissan’s lifeline. The French automaker Renault bought a controlling stake of 36.8 percent. This created the Renault Nissan Alliance and brought in a new CEO, Carlos Ghosn. He promised that Nissan would return to profitability within a year. He stepped in like a captain steering a ship through a storm.
Ghosn launched aggressive cost-cutting. Five factories in Japan were shut down, and twenty-one thousand employees were laid off. Consultant expenses were cut, debt was reduced, and to his credit, he put his own job on the line.
Carlos Ghosn said, “We stated clearly that if any one of the goals was not met, the president of the company and the executive committee would resign.”
When the deadline arrived, he delivered. Nissan reported the best financial results in its history. In just one year, net profits jumped to 2.7 billion dollars, up from a loss of six point four six billion. Nissan had escaped bankruptcy, and Ghosn was celebrated as the man who pulled off the impossible.
But no one knew that he would later be the person who brought Nissan to its knees. For the moment, though, he was unstoppable.
In 2005, he became the CEO of Renault while still serving as CEO of Nissan, making him the first person to run two Fortune Global 500 companies at the same time. The alliance continued to grow. In 2016, Nissan acquired 34 percent of Mitsubishi Motors, forming the Renault, Nissan, Mitsubishi Alliance. The goal was clear: more scale, more efficiency, and more leverage against giants like Volkswagen and Toyota. Nissan became a global powerhouse, and Ghosn, as chairman, sat at the top. The alliance looked unbreakable, or at least that is what everyone believed.
Then everything fell apart. Ghosn was accused of underreporting income and using company assets for personal purposes. In November 2018, he was removed as chairman. While awaiting trial in Japan, he famously fled to Lebanon, where authorities could not extradite him.
It was the classic arc: you either die a hero or live long enough to see yourself become the villain. The scandal devastated the alliance’s reputation, and the shares of all three companies fell sharply.
But Nissan had an additional problem. Ghosn had led the alliance for more than a decade, and his removal left a leadership vacuum. Mitsubishi distanced itself. Renault restructured its boards. Nissan, however, was left directionless.
The company technically had a CEO, Hiroto Saikawa, but shortly after Ghosn’s escape, Saikawa became involved in his own pay scandal and resigned. Things had gone from terrible to even worse.
Nissan was now leaderless, unstable, and facing an identity crisis. The question was obvious, who could possibly take charge next?
Uchida’s “Nissan NEXT” Recovery Plan:
In October 2019, the board unanimously appointed Makoto Uchida as CEO. But Uchida stepped into a storm. After the scandals, Nissan’s share price had already been cut in half between 2018 and 2019. Then the world shut down.
COVID hit Nissan hard. In the first quarter of 2020, the company reported a revenue drop of 50.5 percent, an operating loss of 1.44 billion dollars, and a net loss of 2.67 billion. Nissan had slipped back into the red.
So what did Uchida do next? He introduced a new recovery plan called Nissan NEXT.
Makoto Uchida said, “Our goal is to bring Nissan back to a growth track by the end of fiscal year 2023. To achieve this, we will focus on steady and profitable growth without chasing unrealistic sales numbers, concentrate on our core strengths while improving the quality of our business and financial discipline, and restore a culture that reflects true Nissan values for a new era.”
Those statements sound good, but Uchida also set specific targets. Nissan needed a five percent operating profit margin and a six percent global market share. These were the benchmarks for success.
At the time, Nissan was nowhere near these numbers, and the company had a long climb ahead.
Nissan NEXT Benchmarks:
Could Uchida pull it off? Could Nissan do the impossible a second time? The heart of Uchida’s plan came down to the phrase he kept repeating: core competencies.
To get there, Nissan made bold cuts. Global production capacity was reduced by twenty percent. Their product lineup was trimmed by fifteen percent. They pushed out twelve electric vehicles, even ahead of schedule, aiming to grab a slice of the rapidly growing EV market. Global management teams were condensed, which also helped them reallocate and optimize more than three billion dollars in costs.
So, did any of this actually work?
Before long, Nissan released its 2021 financial results, the first year under Nissan NEXT. And surprisingly, it was a win. Nissan reported an operating profit of 2.2 billion dollars, or 247 billion yen. They were officially out of the red.
But Uchida could not celebrate too much. Even after all the effort, the operating margin sat at only 2 percent, far below the 5 percent goal. And that 6 percent global market share he had mentioned earlier was still noticeably absent from the conversation.
Nissan kept pushing. By 2022, their operating margin rose to three point six percent.
Nissan NEXT Result:
Then, it happened. Third quarter results, 2023. 478.4 billion yen, about $3.3 billion. An operating profit margin of 5.2%. They had done it. Nissan’s leadership celebrated, although there was still no mention of their market share goal.
The Inventory Crisis and Strategy Failure:
But the momentum would not last. Behind the scenes, a chain reaction had already begun, and Uchida soon watched months of progress slip through his fingers.
It started with two key models, the Nissan Rogue and the Nissan Sentra. These were important cars for the United States market, which made the situation even more alarming. Normally, dealerships cycle through model years with little friction. As one year’s inventory thins out, the next arrives, keeping everything steady. This time, something was off. The 2023 models were not moving as quickly as expected. That created an oversupply.
Then it got worse. Production issues began piling up. Uchida later explained the problem clearly, saying that Nissan had failed to reduce inventory to the levels they expected. The shift between the 2023 and 2024 Rogue models had been bumpy, which caused the stockpile to surge. The Sentra ran into similar trouble, partly because of the bottlenecks caused by the Rogue.
By early 2024, Nissan’s inventory had ballooned to more than 640,000 vehicles. Half of those were sitting idle on dealership lots. Just three years earlier, in 2021, that number was only 250,000.
To clear out the excess, Nissan launched deep discounts. Prices dropped. Dealers received cash bonuses if they could move units quickly. But these moves treated the symptoms, not the cause. Why were so many cars sitting unsold?
The real answer was bigger than a production hiccup. Nissan had been investing heavily in EVs while still manufacturing traditional combustion engine cars. Yet something was missing from their lineup: hybrids. This was surprising, especially since Japan had been a leader in hybrid technology, with Toyota dominating that space. Nissan actually had a Rogue Hybrid, but it was discontinued in 2020.
Nissan had assumed that hybrids were fading and that EVs would take over. Instead, the opposite happened. Hybrid demand skyrocketed. In the United States alone, hybrid sales nearly hit 1.2 million in 2023, a jump of 53 percent from the previous year. Globally, the number passed 4 million. In fact, hybrids have been growing faster than EVs. Plug-in hybrids saw a 65 percent jump in 2024, while battery EVs grew by only 23 percent.
People often talk about the electric battery market as if EVs are driving all the growth, but the truth is that hybrids are the ones carrying most of the weight.
Financial Re-Collapse and Asset Fire Sale:
And Nissan had no hybrids to offer, not a single option in a market that was suddenly hungry for them. They had placed their bet in the wrong direction, and the consequences showed up fast. With demand slipping and dealerships pushing cars at almost zero profit, Nissan’s earnings collapsed. Their profits fell 99 percent. They dropped to just 995 million yen, about six and a half million dollars.
The fallout was brutal. More than nine thousand jobs were cut around the world. Production plants slowed down. Budgets were trimmed everywhere. Dividends were paused, which was a huge red flag for investors. To keep the company from sinking, Nissan even sold off valuable pieces of its business, including its stake in Mitsubishi.
When Uchida stepped in front of reporters, he tried to keep morale steady. He kept his tone firm while saying that these steps did not mean the company was shrinking, and that the goal was to rebuild Nissan so it could operate in a leaner, more resilient way.
But nobody needed a translator to understand what was really happening. The situation was dire. Nissan could not continue on its own for much longer.
Then something unexpected happened. Help arrived, but not from where anyone thought it would come. Uchida was about to walk into the toughest chapter of his leadership.
The Honda Merger:
Help arrived, but not from Renault or Mitsubishi. It came from Honda, which was surprising to many people inside the industry. Honda operated in a completely different universe. They built cars, yes, but they also made motorcycles, ATVs, lawn equipment, power generators, marine engines, and even private jets. Their business was spread across so many sectors that downturns in one area rarely shook the entire company. On top of that, Honda was Japan’s second-largest automaker, right behind Toyota, with a market cap of around 45 billion dollars. Nissan, at this point, was struggling to stay above ten.
By late 2024, talks of a merger were underway. The idea was to finish the negotiations by mid-2025 and form a new company in 2026. The reason behind this push was no mystery. Honda’s CEO, Toshihiro Mibe, openly warned that Chinese automakers were reshaping the industry. Brands like BYD were dominating the EV world and even outranking Tesla in many regions. If Honda and Nissan joined forces, they would instantly become the third-largest auto group on the planet, sitting just behind Toyota and Volkswagen.
But here is the uncomfortable truth. Honda might benefit from the merger, but Honda did not need Nissan. Nissan, however, absolutely needed Honda. Still, you wouldn’t know that by how the early negotiations played out.
Reports from inside both companies said the conversations started breaking down almost immediately. By January, the cracks were obvious. Honda pushed for cost cuts, including the closure of certain plants that were draining money. Nissan refused. These locations were said to be politically sensitive, which made them nearly untouchable.
Then came another problem. Honda’s leadership started describing Nissan’s decision-making as slow. That is never a good sign in talks like these.
But the real blow landed later. Honda revised its proposal. For decades, Nissan had held the second-place spot in Japan’s auto industry, but that era was over. Honda was now a far stronger company, both in market performance and financial health. So the new proposal stated that Nissan would no longer be part of a merger of equals. Instead, Nissan would become a subsidiary of Honda.
To Honda, it was a logical update, based on numbers, market share, and momentum. To Nissan, it was an insult. Uchida and his team saw it as a step too far. The plan had started as an equal partnership, but with Honda being nearly five times larger than Nissan, equality was only ever true on paper, not in reality.
The Decision and Aftermath:
Even so, Nissan’s pride ran deep. The idea of becoming a subsidiary felt unthinkable. So on February 6th, 2025, Uchida met with Mibe and told him face-to-face that the deal was off. That was it. The merger collapsed right there.
The market reacted instantly. Nissan’s share price dropped below three dollars, which was an eighty percent fall. Honda called the outcome disappointing. Renault, still Nissan’s largest shareholder, said the new terms were basically a takeover without any control premium. One auto analyst put it bluntly. Nissan was in a bad place and had no dance partner left.
And now they were on their own, but not under Uchida. He stepped down just a month later. After everything, he didn’t stay to watch what came next.
Nissan then reported its first operating loss in more than four years, a hit of 79.1 billion yen, which is more than 500 million dollars. Factories started operating on the edge of closure. The company was fighting just to stay upright.
They even unveiled three new EVs to spark some momentum, but with the current EV market losing steam, that move might not be enough. They also began developing new hybrid models, something they should have done years earlier. A new CEO took over and announced more than twenty thousand layoffs. It was a harsh reset, but at this point, they were out of options.
The numbers paint an ugly picture. Fifty billion dollars in debt and no profits. Macroaxis goes as far as giving them a full one hundred percent chance of bankruptcy. Whether Nissan can survive this storm is anyone’s guess.
And the most painful part is that the help they needed was right there. Honda could have given them the stability and resources to recover, but Nissan’s pride pushed it away.
As the saying goes, pride comes before the fall.
Conclusion:
Nissan’s story is a stark reminder that pride can cloud judgment, derail strategic decisions, and even push a once-mighty company toward bankruptcy, showing that survival often demands humility over ego.
FAQs:
1. Why did Nissan face financial troubles despite past successes?
Risky decisions, leadership scandals, and misreading market trends led to repeated financial struggles.
2. How did Carlos Ghosn initially save Nissan from bankruptcy?
He cut costs, reduced debt, and restructured operations, returning the company to profitability.
3. What was the Nissan NEXT recovery plan, and did it work?
It focused on core strengths, cost cuts, and EV expansion; it improved profits but didn’t fully restore market share.
4. How did the inventory and hybrid strategy failures impact Nissan’s profits?
Oversupply and missing hybrid options caused sales collapses and a 99 percent drop in earnings.
5. Why did the proposed Honda merger fail?
Nissan’s pride rejected becoming a subsidiary despite financial necessity, collapsing the deal.
6. What lessons can other automakers learn from Nissan’s decline?
Humility, market adaptability, and balanced innovation are crucial to avoid overconfidence-driven failure.
