Nissan more than doubles layoffs to around 20,000
Nissan is undertaking significant cost-cutting measures, including laying off an additional 11,000 workers, bringing the total layoffs to 20,000, in response to a severe decline in profits and challenging market conditions. The automaker has been adversely affected by falling sales in major markets like the United States and China, compounded by the failure of merger talks with Honda and the pressures from rising Chinese electric vehicle manufacturers. New CEO Ivan Espinosa faces the arduous task of revitalizing Nissan's brand and financial health, emphasizing the need for operational efficiency and reduced reliance on sales volume. The company plans to achieve 500 billion yen in cost savings by reducing its production plants from 17 to 10 and simplifying its parts by 70%. Despite these efforts, a quick recovery seems unlikely, with projections of a substantial operating loss in the near term due to past strategic missteps under former leadership.
Context:
Nissan is undertaking significant cost-cutting measures, including laying off an additional 11,000 workers, bringing the total layoffs to 20,000, in response to a severe decline in profits and challenging market conditions. The automaker has been adversely affected by falling sales in major markets like the United States and China, compounded by the failure of merger talks with Honda and the pressures from rising Chinese electric vehicle manufacturers. New CEO Ivan Espinosa faces the arduous task of revitalizing Nissan's brand and financial health, emphasizing the need for operational efficiency and reduced reliance on sales volume. The company plans to achieve 500 billion yen in cost savings by reducing its production plants from 17 to 10 and simplifying its parts by 70%. Despite these efforts, a quick recovery seems unlikely, with projections of a substantial operating loss in the near term due to past strategic missteps under former leadership.
Dive Deeper:
Nissan plans to cut 11,000 more jobs, increasing the total layoffs to 20,000, as part of a strategic move to reduce costs amid a sharp decline in profits, with the operating profit plummeting by 88% in the last financial year.
The automaker has been grappling with weakened sales in its key markets, including the United States and China, and recently faced a setback when its merger discussions with Honda collapsed, necessitating a leadership change.
CEO Ivan Espinosa is tasked with reversing the company's fortunes, focusing on operational improvements and aiming for profitability by moving away from a volume-based strategy that led to an outdated product lineup.
Nissan's cost-saving initiatives include cutting the number of production plants from 17 to 10 and simplifying components by 70%, all aimed at achieving 500 billion yen in savings compared to the 2024 fiscal year.
Market analysts attribute Nissan's current financial troubles to past strategies under former Chairman Carlos Ghosn, which prioritized sales volume and discounts over sustainable growth, leading to an aging fleet.
The company is also contending with external pressures, such as US tariffs and competition from rapidly advancing Chinese electric vehicle manufacturers, which threaten its market position in Southeast Asia and other regions.
Despite efforts to streamline operations and reduce costs, Nissan anticipates a significant operating loss in the upcoming quarter, reflecting the challenges of a quick turnaround in the face of substantial internal and external obstacles.