The rise and fall of Nissan Motors: Global icon to industry underdog

From creating revolutionary cars like the 240Z to hitting over 8% market share in the United States by the 2010s. Today, Nissan Motor sales are down 40%. It's bleeding cash and investors are concerned it may not survive. This is a video about the rise and fall of Nissan Motors and what we as business owners can learn from this story. In the 1970s, Datsun, which was the name of the company at the time, made a splash right, bringing to the US the 240Z. It was a car that gave people the kind of delight of driving of a British sports car but without all the headaches of repairs and, well, breaking down all the time. Car was an amazing hit. It outsold rivals, uh, from the British Isles and became the fastest-selling Japanese sports car of all time in 1979 when it sold 86,000 cars. Nissan took this heritage to create cars that had an everyday usefulness with a sporty appeal. Cars like the Maxima that were basically a Japanese BMW, or the Sentra SE-R, which was like a souped-up version of sportiness, right, in a compact car. And the 1970s were a lucky period for Japanese automakers, especially Nissan. In 1973 and 1979, we had oil shocks that pushed prices for oil and gasoline through the roof. So American consumers started to look for small, compact, and fuel-efficient vehicles. Nissan leaned into this bold design and approach to become a pretty successful carmaker. Whereas Honda was known for their engines and relative level of engineering centricity in building their cars, and Toyota was winning around cars that just never seemed to break and were conservative, Nissan found a pretty amazing niche. And by the 1980s, this mix of innovation, practicality, and fun, well, it made Nissan one of the most popular car brands in the United States. By its 1985 peak, Nissan was selling 830,000 cars a year in the United States. It was a true rival for Toyota and Honda, who each had about 6 or 8% of the US market at the time. But by the 1990s, trouble was brewing at Nissan. Uh, their kind of lead around innovation and inspiring design, it was gone. Uh, they started to bring out bloated and uninspired cars. This was made worse by bloated costs. They had too many factories, too many overlapping models, too many executives, just too much of everything in terms of dollars was going out the door every month. Good companies in a situation like this will look and realize what's going wrong, which is in the end, you need to take care of customers and you need to be the right-sized, right-built company to do that. But Nissan did the other thing, which was to blame external factors like currency appreciation, regulation, bad luck for their problems. In other words, instead of looking at what they were doing wrong, they blamed everybody outside the four walls of the factories. While Toyota had a model of kaizen, continuous internal improvement, and Honda understood its core business was rock-solid engines, Nissan's culture was blaming everybody else for what was going wrong. And all of the hubris and overconfidence from the '80s and then mistakes into the '90s led Nissan to a point where by the late '90s it was saddled by over $25 billion in debt, which was, well, okay, debt can be useful in situations. But the problem was Nissan's market share had shrunk for 26 straight quarters. In other words, they had all these huge fixed costs. They had a bunch of debt, and the number of cars they were selling year after year was shrinking. And all of this happened at a horrible time. You know, in the Japanese economy in the 1980s, there had been a massive boom and then a big, huge bust. And what was left at the end was a very valuable, appreciated yen, which made it even harder for folks like Nissan who were exporting a lot of vehicles to make money. If your currency is really expensive and you're paying your wages in your currency and all that kind of stuff and then trying to sell it in somebody else's currency, in this case Japanese yen and then dollars, uh, every day you're fighting a losing battle because 'cause your products are just more expensive than the next guy's. So in the late '90s, almost bankrupt, Nissan needed a hero to turn things around. But before I tell you about that, let me tell you about my channel, which is about the rise, fall, and sometimes, resurrection of iconic companies. If you're interested in that kind of stuff, I've created a one-page document that's linked below, which has all of the greatest lessons from these videos put into one thing. You can sign up for it. The link will be below. So in step to Renault, they were a European carmaker who saw the Nissan business as their ticket to Asia. 1999, they assumed $5.4 billion of Nissan's debt. This gave them 36.8% of the business and instantly catapulted Renault and Nissan to be the fourth largest automaker in the world. In return, Nissan got a 15% non-voting stake in Renault itself. And you can see the problem here. Renault has the ability to tell Nissan what to do. But Nissan doesn't have any ability to tell Renault what to do. And this structural problem would be one that would come to haunt the alliance in the future. The first thing Renault did was deploy a foreigner, a man named Carlos Ghosn, to come in and revolutionize Nissan. And he did things that were just crazy to folks inside of the kind of Japanese community. He came in, laid people off, slashed costs, closed factories. This is all stuff that was pretty tough for a company that had been so insular for so long. He closed 5 factories, slashed 21,000 jobs, and famously promised to cut 20% off the expenses. Carlos famously said the problem with Nissan was not outside of Nissan. The problem was inside of the factories and offices, and he aimed to fix it. Carlos's approach was very much a Western one, in my opinion, very much appropriate for the situation. The company was dying. But he came in and he did some things that were just totally against Japanese norms. This is a society that operates very well on hierarchy, on rule following, and on adherence. And is okay a lot of times with big bureaucracy and bloatedness. Well, here came in a guy who just stomped on everyone inside of the executive offices from top to bottom in an effort to turn the company around. And that was something that later on a number of these people that he stomped on would remember. The approach worked. By 2000, they had swung from losing billions of dollars to a $2.3 billion profit. Their margins by 2003 were 10%, which was amongst the best in the industry. I poop a lot on the idea of synergies amongst mergers, actually working on this channel, but in this case it actually worked. Renault and Nissan were able to save a ton of money by doing shared suppliers, shared parts, all that kind of stuff. It saved billions of dollars and enabled both of them to actually get much more profitable than they would have been on their own. 2002, the partnership showed a $3.3 billion savings across the two businesses. Pretty incredible. But in the end, what makes car companies work is having great cars. And in this period, Nissan launched a level of cars that were just incredible. Iconic designs like the Nissan Murano, the 350Z, and they were on track to release the Nissan Leaf, which was the first electric vehicle in 2010. Like, Nissan was back. And the Japanese population, like, they love a winner just like anybody else does. Carlos became an instant celebrity. They even put him in comic books. But by the early 2010s, the company, fresh off of this turnaround and a level of confidence in winning, it becomes addicting. And they decided they wanted to win even more. They wanted to overtake Toyota and Honda and beat them for global market share. 2011, Carlos and his team rolled out a thing called Project 88. It was a plan designed to take Nissan from 8% market share to over 10% in the next few years, overtaking their rivals. Carlos went out and publicly declared astounding goals like 10% market share in the United States, which was just an incredible number that would have been unthinkable just a decade prior. This was one of those decisions that got made because it personally benefited everyone around the table at Nissan, but it turned out to be the exact wrong decision and wrong direction to take the company. Carlos Ghosn was addicted to some extent to the trappings of success. He wanted to cement his legacy as one of the greats in the history of automotive production and leadership. So he was highly incentivized to grow the company at all costs. For the executives at Nissan, they were sick of being second fiddle to Renault, who was consistently bossing them around and playing the upper hand in the partnership. If they could get more scale for Nissan, they could have more leverage over the partnership. And potentially not feel like second-class citizens anymore. Dealers were happy about a— a sales goal as well. That meant they could sell more and service more cars and therefore make more money. Investors, potentially they would win out too. They own stock in the business and they knew that stock markets love growth stocks and their stock prices would go up. Employees would win as well. When a company is growing, that means you can take on greater responsibility, get paid more, there's more profits to go around. And seemingly everybody who was around the table at Nissan was happy for a growth at all costs strategy. It would help them personally. And what would happen next would show the fundamental flaw with chasing growth at all costs. See, because it turns out what matters for a business is not how much you sell, it's how much profits you make. And a growth at all costs strategy, well, it has a habit of making you less profitable. So to chase growth, Nissan went after fleet sales. That's where you sell cars in bulk to companies and also to rental car folks. They paid even higher incentives than their competitors. They were paying $3,400 a vehicle, which is nearly double what Honda was paying, just to flood the market with more of their cars, keep the factories busy, and grow their market share. In 2016 alone, fleet sales increased by 42% for Nissan, and the growth at all costs strategy was working to some extent. By mid-2016, market share for Nissan hit 9.7%, slightly behind their 10% goal. But that came with a problem. In one quarter alone, their profits went down by 9%. Turns out that exactly what I said before— revenue growth is great, but it can also make it hard to make money. And that's what was going on with Nissan. But Carlos and his team kept pushing. In 2016, they bought a 34% stake in struggling automaker Mitsubishi Motors and brought that into the Renault-Nissan Alliance, complicating matters even more, which would prove to be fateful. As things went on in the coming years. If you're going to sell more cars, you need to have more dealers pushing them. So Nissan overbuilt their dealership network at this time as well. By the late 2010s, they had over 1,000 dealers nationwide, which, to put that in perspective, is more than auto giant and successful automaker Honda has. With this many dealers, they needed incentives to push cars. And so they got hooked on those incentives. And so when Nissan eventually tried to cut back on those incentives in the late 2010s, after seeing that they were hurting profits so much, The dealers revolted and many of them started to struggle. But the biggest problem with this growth at all costs strategy was it caused Nissan to forget what it was all about. And what Nissan was all about was leading on great design, innovation, and reliability. And at this time in the 2010s, the products from Nissan started to struggle. The Altima was very much uninspired. The SUVs were just not interesting. And their early lead to the market with the electric Leaf, well, that proved to be kind of a joke. I remember people talking about that as an EV option and talking about how terrible it was. And it turns out it was because Nissan had taken their eye off the ball. Then in 2018, Carlos Ghosn was arrested on charges of financial impropriety in Japan. The hammer fell on the once-star CEO for Nissan. Carlos was accused of underreporting income and misusing funds. And then in a funny side note to the story, he ended up escaping Japan in a furniture box. So that's off topic for this video. But if you haven't read about that story, it's a crazy kind of gumshoe whodunit worth digging into. It turns out his staff and executives at Nissan had been a lot of the ones to report Carlos. They had basically gotten together to try to oust him, to prevent him from giving even more control of Nissan to Renault. And look, a lot of what he had done nearly 20 years earlier in renovating the company— people have long memories when they get butthurt, and this group of people didn't have any loyalty to him anymore. And the only thing that had been pretty much saving him was they were doing really well. And now that they weren't doing well, well, he was a target. This merger and the fucked up structure of it had created an opportunity for Nissan to turn into a battlefield when things were going poorly. In fact, Ghosn's successor, a man named Hiroto Sakawa, came in and then guess what happened to him? Well, there was a revolt as well because of battlefield stuff inside the boardroom, and he was ousted on his own accusations of financial impropriety. One insider was quoted in the press as saying, "What we have today going on at Nissan is a man-made disaster. It is a combat happening inside the place that is destroying the company." And no company is going to be solid in the market and take care of its customers well and be dependable if you can't have a stable, solid foundation inside the leadership. In 2019, Nissan lost $6.2 billion, its first loss in over a decade. And in 2020, car sales for them went down by 32%. From the period of 2017 to 2022, global sales of vehicles for Nissan went down 40%. In this period, their stock price plunged 70%. They missed the EV boom as Tesla surged ahead. Remember, the Leaf had been last updated like, I don't know, 2010. It was a total joke. And they totally missed what's going on today in the auto market, which is people rushing back to hybrid vehicles. He brought in the Nissan Next Plan, which was famously kind of a reflection of what Carlos Ghosn had done in the late 1990s, uh, reducing bloated costs, shrinking down and harmonizing the number of models, and going back to what had made Nissan great, which was steady growth, profitability, innovation, and in the end, hopefully great designs. The plan had Nissan going all in on electrified designs, refreshing a lot of beloved models, the Rogue, the Z, the crossovers, with the idea of bringing out 27 new electrified models by 2030. In other words, going back to exciting, hopefully desirable design for the company. In 2023, with the civil war seemingly settled, Nissan got more of what it wanted with Renault, which was to be out from under their thumb. They reset the alliance, giving Nissan more autonomy and more authority over their own future. I remember going to the LA Auto Show in 2024. We walked around all the different brands and Nissan was by far the saddest brand of all. The models looked like they were straight out of a showroom in 2018. There was lots of plastic. They didn't feel modern. They weren't hybrid. There weren't EVs. Just felt like they'd taken the showroom from 2018 and transplanted all the cars into 2025 models and expected people to buy them. and I saw nothing interesting. And given that new auto designs take somewhere between 4 to 7 years to come to market, sometimes longer, it's fascinating that what you see in 2025 is the echoes of the dysfunction from the Carlos Ghosn twilight era back in 2017 and 2018, when the management was so busy fighting with each other that they weren't figuring out how to make great cars. In 2025, after another tough year, where the company lost $4.3 billion in the last fiscal year. Uchida is out and he has been replaced by another foreigner, a man named Ivan Espinosa, who is Mexican-born, which is awesome given Mexico's like that way, about 3 hours. Espinosa immediately announced deeper cuts in jobs, 20,000 people, closing a number of plants from 17 to 10. And notice when Uchida was talked about earlier in this video, I didn't mention any of the Japan plants. Well, sometimes it seems like you need an outsider from a culture to come in and make you do the really hard decisions. And in this case, Espinosa is trying to figure out how to make Nissan profitable with 2.5 million cars a year rather than 3 million. And the only way to do that is to cut a number of factories, including some of those in Japan. Espinosa is supposedly really good at the selling side of making cars. Which should hopefully be good for Nissan. And the signs of return and turnaround are actually pretty good. Market share for the company went from 4.2% in 2024 to 5.6% over the summer of 2025. And all this is pretty crazy because Nissan did it without any new models at all. And so far, the other verdict on Espinosa is he's done a great job winning over the dealers, making them feel more inspired by the line of product. With a lot of new models coming on, coming on the showroom floor in the next coming years. Having promised 20 new models to come online by 2027, I'm actually really rooting for Nissan. I really hope they turn around. I remember the Maxima, seeing that around when I was in high school, the Murano, all these cars that were just so cool. And it would be a tragedy if a brand as beloved and with such a cool niche around innovation and cool design as Nissan has, couldn't turn it around and went away. The big lesson of this story is sometimes an outsider is really required to turn things around and disrupt the status quo at a failing organization. And in economics, we talk about this concept called the institutional imperative. And the rule is for institutions, organizations, universities, government, all that kind of stuff. The number one rule of these institutions is they move to protect themselves and the status quo. And if you understand that whenever you're dealing with an organization or an institution and they frustrate you, uh, the reason is the organization is always looking out for number one, which is preserving the organization. And in this case, well, the financial markets are making Nissan change, and, uh, well, that's a good thing for the future of the company because hopefully they'll enable to survive in the long term. All right, this is one of my most requested videos from people. It was fun digging into the recent history of Nissan and learning some lessons from it. What did you take away? What did you think of Nissan? And what do you think of their future? Let me know in the comments below. I try to read them all. See you. Bye.