Nissan Slashes 9,000 Jobs in Drastic Turnaround Effort

Nissan Motor Co. has announced a dramatic restructuring plan that includes cutting 9,000 jobs globally and slashing production capacity by 20% as the Japanese automaker struggles with declining sales and profitability. The drastic measures come as Nissan reported a quarterly loss and downgraded its profit forecast for the year by 70%, highlighting the severe challenges facing the company.

Sweeping Job Cuts and Cost Reductions

The 9,000 job cuts represent nearly 7% of Nissan’s global workforce of around 133,000 employees. While the company did not specify where the cuts would be made, they are likely to affect operations around the world. In addition to the job losses, Nissan plans to reduce its global production capacity by a fifth, signaling a significant scaling back of its manufacturing footprint.

As part of the emergency turnaround plan, Nissan aims to cut costs by 400 billion yen ($2.6 billion). In a symbolic move highlighting the gravity of the situation, CEO Makoto Uchida announced he would take a voluntary 50% pay cut. These actions underscore how dire Nissan’s financial position has become and the urgent need for drastic restructuring.

Financial Struggles Mount

Nissan’s latest financial results paint a grim picture of the company’s current state. For the July to September quarter, Nissan reported a net loss of 9.3 billion yen ($62 million), compared to a profit of 190.7 billion yen in the same period last year. Revenues also declined by 5% to 2.99 trillion yen.

Even more concerning is Nissan’s dramatic downgrade of its full-year profit forecast. The company slashed its annual operating profit outlook by 70% to just 150 billion yen. It also lowered its global vehicle sales forecast to 3.2 million units, down from a previous estimate of 3.45 million. These revisions indicate Nissan expects its struggles to continue in the coming months.

Reasons Behind Nissan’s Troubles

Several factors have contributed to Nissan’s current predicament. The company has failed to keep pace with the shift towards electric and hybrid vehicles, leaving it vulnerable as the auto industry undergoes a historic transition. While rivals like Toyota and Honda have found success with hybrid offerings, Nissan has struggled to compete in this growing segment.

CEO Uchida admitted the company had not adapted quickly enough, stating: “This has been a lesson learned and we have not been able to keep up with the times. We weren’t able to foresee that hybrid electric vehicles and plug-in hybrids would be so popular.”

Nissan has also faced intense competition from Chinese electric vehicle makers, who have rapidly gained market share in China and are expanding globally. This has put pressure on Nissan’s sales and profitability in the world’s largest auto market.

Broader Auto Industry Challenges

Nissan’s troubles reflect wider challenges facing the global auto industry. Most major carmakers have reported declining profits recently due to fierce competition, particularly from Chinese EV producers. Volkswagen has announced plans to close several plants in Germany for the first time in its history, while Stellantis (owner of Peugeot, Fiat, and Jeep) recently carried out a management overhaul following weak US sales.

The industry is grappling with the costly transition to electric vehicles, changing consumer preferences, and economic headwinds in key markets. Nissan’s drastic restructuring highlights the pressure automakers face to adapt quickly or risk being left behind.

Nissan’s Plans to Turn Things Around

In addition to cost-cutting measures, Nissan is taking several steps to revitalize its business. The company recently formed a partnership with Honda to jointly develop electric vehicles and software, aiming to better compete with Chinese rivals. Nissan plans to launch new EVs in China and plug-in hybrids in the US to refresh its aging vehicle lineup.

Nissan is also adjusting its corporate structure, introducing a new chief performance officer role responsible for sales and profit. This change is intended to enable faster decision-making on turnaround actions. Additionally, Nissan reduced its stake in alliance partner Mitsubishi Motors from 34% to 24% to strengthen its balance sheet.

Outlook Remains Uncertain

While Nissan’s restructuring plan is ambitious, the road ahead remains challenging. The company must execute its turnaround strategy flawlessly while navigating a rapidly evolving auto industry. Success will depend on Nissan’s ability to develop compelling new vehicles, especially in the EV and hybrid segments, while dramatically improving its cost structure and operational efficiency.

The next few years will be critical in determining whether Nissan can regain its footing and return to profitability. The stakes are high not just for Nissan, but for Japan’s auto industry as a whole. As one of the country’s flagship companies, Nissan’s struggles highlight the broader challenges Japanese automakers face in maintaining their global competitiveness in the electric age.

For now, Nissan’s drastic job cuts and restructuring signal the company’s determination to survive and adapt. But only time will tell if these measures will be enough to secure Nissan’s future in an increasingly cutthroat global auto market.