Nissan Tightens the Belt by Cuting 9,000 Jobs and Scales Production Amid Slumping US and China Sales
Nissan, Japan’s third-largest automaker, is undertaking drastic measures to stay afloat as it faces dwindling sales in two of the world’s largest automotive markets: the United States and China. The company announced plans to cut 9,000 jobs, reduce global production by 20%, and sell a portion of its stake in Mitsubishi Motors as part of a sweeping restructuring plan aimed at cutting costs by a staggering 400 billion yen ($2.6 billion) in the current fiscal year.
Bold Cuts Amid a Challenging Market Landscape
Nissan has been in a tough spot for several years, still struggling to regain its footing after the turbulent ousting of former chairman Carlos Ghosn in 2018 and the fallout that shook its alliance with Renault. Now, CEO Makoto Uchida is focused on a new, aggressive plan to bring Nissan’s expenses under control. This overhaul is set to reduce manufacturing capacity worldwide, trimming Nissan’s existing 25 production lines and adjusting line speeds and shift patterns to adapt to lower demand.
Uchida also announced that he and other top executives would take voluntary pay cuts, with Uchida himself giving up half of his monthly compensation as a gesture of commitment to the company’s recovery.
Sales Slowdown in Key Markets: China and the United States
China, Nissan’s largest market by volume, saw a steep 14.3% sales decline for the first half of the fiscal year, a stark indication of the company’s uphill battle. Nissan, like many foreign automakers, has been caught in the crossfire of China’s preference for electric and hybrid vehicles, spearheaded by local automakers like BYD. These companies offer affordable EVs with cutting-edge technology, something Nissan’s current lineup lacks. The situation is so dire that Nissan was forced to slash its annual profit outlook by 70%, cutting expectations to a modest 150 billion yen ($975 million).
In the United States, the picture is equally concerning. Nissan has been slow to adopt hybrid technology, missing the mark on growing demand for hybrid electric vehicles (HEVs), a segment where its primary rival Toyota has excelled. Uchida admitted Nissan misread the rising demand for hybrids in the U.S., explaining that the company recognized the trend only recently but has struggled to make swift changes to its core models.
Selling Mitsubishi Shares to Raise Capital
As part of its restructuring, Nissan will sell up to 10% of its shares in Mitsubishi Motors, expected to raise approximately 68.6 billion yen ($445 million). This sale not only adds to Nissan’s cash reserves but signals a shift in its strategic partnership approach. It also raises questions about Nissan’s future collaborations within the Renault-Nissan-Mitsubishi alliance, once a powerful force in global auto manufacturing.
Restructuring Targets: Leaner Production and Faster Development
Nissan’s restructuring doesn’t just stop with job cuts and asset sales. The company plans to streamline its development process, reducing vehicle lead times to 30 months. This move aims to increase efficiency, allowing Nissan to bring new vehicles to market more quickly, which is especially important as consumer preferences evolve faster than ever.
Chief Monozukuri Officer Hideyuki Sakamoto detailed the plan to adjust production lines by modifying line speeds and work schedules at its facilities, which will ultimately bring Nissan’s production capacity in line with current demand. The company has not specified which facilities or locations will face cuts, but the impact will undoubtedly be global, affecting Nissan’s 133,580-strong workforce.
What’s Next for Nissan?
The tough cuts come as Nissan and its rivals navigate a complex post-pandemic market landscape. As demand for conventional gasoline-powered vehicles wanes, Nissan’s lag in hybrid and EV technology has left it struggling to keep pace. The company’s recent operating profit for the second quarter plummeted 85% year-over-year to just 31.9 billion yen, missing analyst expectations by a wide margin.
Looking forward, Nissan is hoping that a leaner, more agile operation will help it reclaim market share. But the automaker has an uphill battle ahead as it works to close the technology gap with competitors in both hybrid and fully electric vehicles. In the meantime, Nissan’s latest moves suggest it is intent on stabilizing its balance sheet and reinvesting strategically where it sees potential for growth, such as in its alliance with Renault and the further adoption of hybrid and electric technologies.
For Nissan, the current situation serves as a stark reminder of the dangers of failing to anticipate shifting market trends, particularly in technology and consumer preferences. The company’s restructuring efforts may stabilize its finances, but long-term recovery will depend on its ability to innovate and adapt to a rapidly evolving automotive landscape. With its aggressive cost-cutting measures, Nissan is aiming to build a more resilient foundation that will allow it to compete more effectively in the years ahead, though it will have to play catch-up to meet rising consumer expectations in green and hybrid technology.
In a period of intense competition and shifting demands, Nissan’s pivot will determine its future role in an increasingly eco-conscious and technology-driven auto market.