On the 7th, Nissan Motor Co., Ltd announced a business restructuring plan that includes cutting 9,000 jobs worldwide in response to poor business performance. As competition intensifies, Mr Uchida is trying to recover by taking drastic measures, such as cutting car production capacity by 20%, but some have said he needs to rethink his management style, and Mr. Uchida is at a critical point.
Nissan is facing increased sales incentives in its main market, the United States, and is also struggling in China, where competition from local companies is growing. The company’s global sales forecast for this fiscal year has been reduced by 250,000 units to 3.4 million units. As a result, the operating profit plan for this fiscal year (ending March 2025) was revised down from the previous 500 billion yen to 150 billion yen. This was well below the market forecast of 321.9 billion yen.
Net income for the July-September period (second quarter) fell to a deficit of about 9.3 billion yen. This is the company’s first quarterly net loss since the January-March 2021 period, according to Bloomberg data. Due to poor business performance, the company had previously forecast an annual dividend of 25 yen per share, but the interim dividend has been postponed, and the year-end dividend will be determined in the future based on business performance.
Nissan President Uchida
Photographer: Kiyoshi Ota/Bloomberg
Nissan has approximately 130,000 employees worldwide, or 9,000 employees, or approximately 7% of the total. In addition to implementing measures such as reducing costs and SG&A expenses and rationalizing owned assets, Makoto Uchida, President and CEO, will receive a 50% remuneration return starting this month, and voluntary remuneration will be given to key executives accordingly it will be returned.
Although he has reduced his own compensation and instituted large-scale cost-cutting measures, criticism against him is likely to increase in the future. The business plan announced in March this year for the fiscal year ending March 2027 set out to increase sales by 1 million units over a three-year period and further improve profit margins, but there are currently major discrepancies between these targets.
At a press conference on the same day, Mr. Uchida said that the company’s medium-term plan targets for increased sales and an operating profit margin of over 6% will be reviewed in light of the current situation. The company plans to change its structure to one that can ensure sustainable profitability and cash flow even with annual sales of 3.5 million units, but it is unclear whether its measures will succeed in coming back.
Tatsuo Yoshida, an analyst at Bloomberg Intelligence (BI), said that it will not be easy to rebuild business amid the loosening of supply constraints within the industry and intensifying competition, and said that although there are side effects of harsh treatment, “Survival comes first. .”
In addition, he pointed out that Nissan’s fundamental problem lies in its management style, which is breaking through and making outrageous plans that are not in line with the business environment and the company’s capabilities. He predicted that the plan would be very risky because it is a plan aimed at expansion and depends on increasing the number of vehicles, but he said, “Now, it seems that our n -concern completed.”
Mitsubishi to sell its own shares
At a press conference on the same day, Mr. Uchida emphasized that this initiative is not aimed at achieving a shrinking balance. He recognizes that his biggest role as president is to return Nissan to a growth path by building a business structure that can respond flexibly to changes in the business environment and improve product appeal, and he said that he “definitely the role that must be fulfilled.” to fulfill.”
In addition, the company announced that it will sell up to 10.02% of its Mitsubishi Motors shares to Mitsubishi Motors. The company plans to repurchase its own shares from a cut on the Tokyo Stock Exchange on the morning of the 8th at the stock’s closing price on the 7th (¥460.6).
Nissan is currently undergoing major changes in its business environment, and sales are falling in the Chinese market, where BYD and other companies are increasing their market share due to the rapid shift to electric vehicles (EVs). . There were signs that the company’s operating profit for the April-June period (the first quarter), announced in July, was only 1 billion yen, down 99% from the same period last year.
Interview Between Time.news Editor and Automotive Expert
Time.news Editor (TNE): Good day! Thank you for joining us. Today we’d like to discuss the recent announcement from Nissan Motor Co., Ltd regarding their significant restructuring plan and job cuts. Joining me is Hiroshi Tanaka, an experienced automotive industry analyst. Hiroshi, what are your thoughts on Nissan’s decision to cut 9,000 jobs?
Hiroshi Tanaka (HT): Thank you for having me. It’s a drastic move, but unfortunately, it reflects the urgent state of Nissan’s business. The automotive market, particularly in the U.S. and China, has become fiercely competitive, and Nissan is struggling to keep up. Cutting jobs is often seen as a last resort, but in this case, it suggests that the management recognizes the severity of their predicament.
TNE: Absolutely. The figures mentioned—such as the reduction in global sales forecast by 250,000 units—are quite sobering. What does this drop signify for the company’s future?
HT: It indicates a troubling trend for Nissan. A decrease in forecasted sales means lower revenue, and when combined with declining profit projections, it paints a picture of a company caught in a challenging cycle. The forecasted operating profit was slashed from 500 billion yen to just 150 billion yen, significantly below market expectations. This kind of adjustment might lead investors to question the long-term viability of Nissan’s current strategies.
TNE: Speaking of strategies, President Makoto Uchida has stated that the company will review its medium-term plans given these developments. Do you think this is enough?
HT: The review is certainly necessary—however, mere reassessment isn’t always sufficient. There’s a fundamental issue with Nissan’s management style that has been noted by industry observers. It seems that the company has been setting ambitious targets without a clear roadmap to reach them. Uchida’s decision to cut his own pay and that of key executives is a positive step in terms of accountability, but it won’t resolve the underlying challenges.
TNE: And there’s also the matter of the company’s competitive position within the market, particularly against local firms in China. How do you see that impacting Nissan?
HT: The competition in China has intensified dramatically, and local manufacturers are increasingly offering compelling alternatives to consumers. If Nissan can’t adjust its production and marketing strategies to align more closely with local preferences, it could continue to lose market share. Moreover, reliant expansions in the U.S. market often necessitate flexible responses to changing consumer demands, which seems to be an area where Nissan has fallen short.
TNE: You mentioned the structural changes outlined by Uchida, aiming for sustainable profitability even with reduced sales targets. Do you think this can realistically happen?
HT: While the intention is promising, achieving sustainable profitability requires more than just restructuring; it demands a cultural shift within the organization. Nissan needs to cultivate adaptability and innovation in its operations, particularly as consumers shift towards electric and hybrid vehicles. Refocusing resources on R&D, strategic partnerships, and perhaps even streamlining their production lines could be crucial.
TNE: It sounds like Nissan has a challenging road ahead. Before we conclude, do you have any final thoughts on what steps Nissan should take to stabilize itself?
HT: Absolutely. Besides restructuring, Nissan must prioritize transparent communication with stakeholders and a re-evaluation of its product offerings. Investing in new technologies and forming strategic alliances can also help rejuvenate the brand. Ultimately, success will hinge on their ability to adapt swiftly to the evolving landscape of the automotive industry. Survival must come first, as analysts like Tatsuo Yoshida have noted.
TNE: Thank you, Hiroshi, for sharing your insights on this pressing issue facing Nissan. It’s certainly a pivotal moment in the company’s history, and we’ll be watching closely to see how they navigate these challenges.
HT: Thank you for having me. It’s a pleasure discussing such an important topic.