Nissan Motor Co., Japan’s third-largest automaker, has announced a significant restructuring plan aimed at addressing severe financial and operational challenges.
The plan includes cutting 9,000 jobs, a 20% reduction in global manufacturing capacity, and cost-cutting measures to save $2.6 billion.
The Japanese automaker has been facing a sharp decline in sales in its key markets, particularly China and the U.S., where it has struggled to compete with other automakers offering advanced hybrid and electric vehicles (EVs).
Nissan Financial Challenges and Restructuring Plan
Nissan’s financial struggles have been exacerbated by a decline in sales and rising costs.
The company reported a loss of 9.3 billion yen ($60 million) for the latest fiscal quarter, a stark contrast to the 190.7 billion yen profit recorded in the same period last year.
Quarterly sales fell to 2.9 trillion yen ($19 billion) from 3.1 trillion yen, reflecting the challenges faced by the automaker.
CEO Makoto Uchida acknowledged that Nissan had underestimated the demand for hybrids in the U.S. and struggled to adapt to changing market conditions.
As part of its restructuring strategy, Nissan plans to eliminate 9,000 jobs, impacting approximately 6.7% of its 133,580-strong workforce worldwide.
The company will also reduce its global production capacity by 20% and streamline vehicle development lead times to around 30 months to improve efficiency.
The restructuring will include reducing production capacity on its 25 global production lines by altering line speeds and adjusting shift patterns to optimize output.
In a show of solidarity, CEO Makoto Uchida announced that he would voluntarily forfeit 50% of his monthly salary, and other senior executives have also agreed to take voluntary pay cuts.
Uchida emphasized that these measures are aimed at making Nissan leaner and more resilient, and ensuring the company’s long-term success.
Impact on Key Markets and Future Plans
Nissan’s struggles have been particularly notable in the U.S. and China, where it has faced stiff competition from rivals such as Toyota and BYD.
In the U.S., Nissan’s limited offering of hybrid vehicles has been a significant disadvantage, while in China, local manufacturers have outpaced Nissan with affordable EVs and hybrids equipped with advanced technology.
To address these challenges, Nissan plans to advance the introduction of new energy vehicles in China and plug-in hybrids and e-POWER in the U.S.
Nissan’s announcement of 9,000 global job cuts and a significant restructuring plan underscores the company’s commitment to addressing its financial struggles and improving its competitive position in the global market.
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