Nissan Motor is implementing major restructuring efforts, including cutting 9,000 jobs and reducing its global production capacity by 20%, as it struggles with declining sales and increased competition. The company aims to reduce costs by ¥400 billion ($2.6 billion) in the current fiscal year, following a significant slump in its sales, particularly in China and the U.S.
This move highlights the ongoing challenges faced by Nissan, which has yet to fully recover from the turmoil caused by the 2018 ouster of former chairman Carlos Ghosn and the subsequent scaling back of its partnership with Renault. On November 7, Nissan lowered its annual profit forecast by 70%, now projecting an operating profit of just ¥150 billion ($975 million). This is the second downward revision this year.
Nissan is facing stiff competition in China, where local automakers such as BYD are rapidly gaining market share with affordable electric and hybrid vehicles. However, the more pressing issue for Nissan is in the U.S., where it lacks a competitive hybrid lineup—unlike its Japanese rival Toyota, which has seen a boom in demand for its gasoline-electric hybrid cars. CEO Makoto Uchida admitted that Nissan misjudged the rapid growth of hybrid electric vehicle (HEV) demand in the U.S., noting that the company only recognized this trend in late 2023, but struggled to adapt quickly.
As part of its cost-cutting strategy, Nissan will reduce its production capacity by 20% and work to shorten its vehicle development cycle to 30 months. The company also plans to strengthen its collaboration with partners Renault and Mitsubishi Motors. Uchida and other members of Nissan’s executive committee will voluntarily forfeit a portion of their salaries as part of the company’s efforts to address its financial difficulties.
In addition to these cost reductions, Nissan is selling up to 10% of its stake in Mitsubishi Motors, which could raise up to ¥68.6 billion ($445 million). With 25 production lines globally, Nissan intends to adjust its manufacturing processes by altering line speeds and shift patterns to maximize efficiency.
Nissan’s global sales dropped 3.8% to 1.59 million vehicles in the first half of the fiscal year, driven by a 14.3% decline in China and a nearly 3% decrease in the U.S. Together, these two markets account for nearly half of the company’s global sales. For the second quarter, Nissan’s operating profit plummeted 85% to ¥31.9 billion, far below analysts’ expectations. The company’s difficulties mirror broader challenges in the automotive sector, as competitors like Honda also report declining profits, particularly due to weak sales in China.
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