Nissan has announced a major restructuring plan that will cut 9,000 jobs worldwide as the Japanese automaker grapples with mounting losses.
Alongside the workforce reductions, Nissan will also scale back global production capacity by 20% and streamline sales budgets as part of an urgent initiative to address financial strain and stabilize its business.
The cuts are set against the backdrop of a ¥9.3 billion ($62 million) net loss in the second quarter of 2023, a sharp decline from the ¥190.7 billion profit reported in the same period last year. Nissan’s second-quarter earnings report showed an 85% drop in operating profit year-over-year and a 5% revenue decrease to ¥2.99 trillion. These figures underscore the challenging landscape for carmakers globally, as traditional auto manufacturers contend with declining vehicle demand and increased competition in electric vehicles, particularly from emerging Chinese companies.
Makoto Uchida, Nissan’s chief executive, announced that he would voluntarily reduce his monthly salary by 50% from November as the company enacts “urgent measures” to address its financial downturn. He cited an underestimation of hybrid vehicle demand, especially in the US, as a factor impacting sales. Nissan’s efforts to pivot toward hybrid electric vehicles (HEVs) — combining an internal combustion engine with a smaller battery — came later than expected, with the CEO noting that “we didn’t foresee HEVs ramping up this rapidly.”
Nissan’s board has decided to forego its interim and year-end dividend payments, a move intended to help refocus resources on essential cost-cutting initiatives and investment priorities. The company aims to reduce fixed costs by ¥300 billion and variable costs by an additional ¥100 billion. This plan will involve rationalizing assets and directing capital into research and development.
Despite the global restructuring, Nissan has indicated that its UK plant in Sunderland, which employs approximately 6,000 workers and produces around 325,000 vehicles annually, will likely remain unaffected by the cuts. Additionally, Nissan’s sales and technical centers in Hertfordshire and Cranfield, as well as its design studio in London, are not expected to be impacted.
The financial challenges for Nissan come as it competes in an evolving global market. Nissan’s stock fell more than 10% following the quarterly earnings report, marking a four-year low. This restructuring is part of a larger plan for Nissan to regain profitability, with a target of reaching sustainable cash flow by fiscal year 2026, even at a sales volume of 3.5 million vehicles annually.
CNBC and the Guardian contributed to this report.
