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The crisis at the Japanese automaker continues to intensify. Nissan Motor has announced a series of drastic measures to reduce its costs by about US$2,6 billion (approximately R$14,7 billion) during the current fiscal year. Among these measures, the Japanese automaker highlighted the mass layoff of 9.000 employees, which represents about 6,7% of the company's global workforce. This restructuring also includes a 20% reduction in production capacity, reflecting the challenges faced by Nissan in the Chinese and North American markets, where sales have fallen significantly.
Nissan, Japan’s third-largest automaker, has struggled to stabilize since the 2018 ouster of former CEO Carlos Ghosn and the subsequent waning of its alliance with Renault. For this year, the company’s annual profit forecast was cut by 70%, falling to 150 billion yen (approximately R$5,6 billion), due to a new reassessment of its financial outlook. This situation highlights the crisis at the Japanese automaker, which, like other companies in the sector, faces tough competition in China, where local brands such as BYD dominate the market with more affordable and technologically advanced hybrid and electric vehicles.
In the North American market, Nissan also faces a significant challenge due to the lack of a solid lineup of hybrid cars. By comparison, Toyota, another Japanese automaker, has thrived on the growing demand for gasoline-powered hybrids. At a news conference, Nissan Chief Executive Makoto Uchida admitted that the company underestimated the demand for hybrid vehicles in the U.S., a mistake that is now directly reflected in its sales. “We did not anticipate that hybrid electric vehicles would grow so rapidly,” Uchida said, noting that the automaker only noticed this latest trend toward the end of its last fiscal year.
Restructuring and cost-cutting measures at Nissan
To reduce costs and face the crisis, Nissan is implementing a cut of 9.000 jobs and intends to reduce its global production capacity by 20%. The restructuring also includes a reduction in vehicle development deadlines, which will now be completed in 30 months, in addition to a reinforcement of the partnership with Renault and Mitsubishi Motors. Still in cost-cutting measures, Uchida announced that he will give up 50% of his monthly salary, while other members of the executive committee will also accept salary cuts.
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Nissan is also in the process of selling up to 10 percent of its stake in Mitsubishi Motors, aiming to raise about 68,6 billion yen (about $2,5 billion). The company also said it plans to adjust the capacity of its 25 production lines worldwide, through methods such as changing line speeds and adjusting work shifts, according to Hideyuki Sakamoto, Nissan's production director.
Performance and market impact
The crisis at the Japanese automaker is reflected in significant performance losses financial. In the second fiscal quarter, Nissan's operating profit plunged 85% to 31,9 billion yen, below analysts' expectations of 66,8 billion yen.
The drop in sales is also impacting production: the total number of vehicles sold by Nissan in the first half of this fiscal year fell by 3,8%, to a total of 1,59 million units. Specifically in China, there was an alarming 14,3% drop in sales, while in the US, the decline was almost 3%, to a total of 449 vehicles. These two markets account for almost half of Nissan's global sales volume, highlighting the direct impact of the crisis.
Nissan's situation is similar to that of other Japanese automakers struggling in China. Honda Motor Co., for example, reported a 15 percent drop in operating profit in the second quarter, driven by declining sales in the Chinese market.
Crisis in Japanese automaker
The mass layoffs at Nissan represent yet another chapter in the crisis at the Japanese automaker, which, in addition to facing declining sales, needs to adapt to a scenario of intense competition with hybrid and electric vehicle manufacturers in China and the USA.
The restructuring imposed by Nissan is an attempt to regain financial stability and reposition itself in a global market that demands rapid innovation and adaptation, especially in the hybrid and electric car segment.
Tell the Nissei who caused the crisis with Carlos Ghons to resolve the situation!
Congratulations to Mr Makoto Uchida!
He came to his senses, he will try to save the company and he set an example by cutting half of his salary and that of his advisors. If it were here, the restructuring would stop at layoffs.
Good example, I doubt that here in Brazil top executives would accept reducing their income.
Fantastic cars in Brazil, but very expensive and they don't sell much due to poor after-sales service.