Nissan Motor has announced a series of significant cost-cutting measures, including the elimination of 11,000 additional jobs and the closure of seven plants, as the Japanese automaker grapples with a challenging year marked by declining profitability and strategic setbacks.
The company, which has not yet provided forecasts for the current financial year, reported a sharp decline in operating profit for the previous year. Profit fell by 88% to 69.8 billion yen (£472 million) in the 12 months to March, a stark contrast to the previous year’s figures.
Nissan has been hit hard by weakening sales in the US and China, compounded by the collapse of merger talks with Honda and the recent replacement of its chief executive.
In addition, the company, like its industry rivals, is facing pressure from US tariffs and increasing competition from rapidly growing Chinese electric vehicle (EV) manufacturers, particularly in Southeast Asia.
Newly appointed CEO Ivan Espinosa is aiming to achieve total cost savings of approximately 500 billion yen. However, he faces a considerable challenge in revitalising a company whose brand value has been significantly diminished.
Speaking at a press conference, Espinosa acknowledged the gravity of the situation: “Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support.”
The latest round of job cuts will bring the total reduction in Nissan’s workforce to around 20,000 positions, following an earlier announcement of 9,000 job cuts.
The company plans to reduce the number of production plants from 17 to 10 and cut parts complexity by 70%. However, it has not specified which plants will be affected.
Industry analysts suggest that Nissan’s troubles stem partly from the legacy of former Chairman Carlos Ghosn, whose focus on sales volume led to heavy discounting, leaving the company with an ageing product range that is now in urgent need of updating.
Despite the restructuring efforts, a rapid recovery appears unlikely. Chief Financial Officer Jeremie Papin indicated that Nissan expects to report a 200 billion yen operating loss in the first quarter.
Boluwatife Enome
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