Japanese manufacturer Nissan is in the red. It just suffered an unexpected net loss of 56 million euros in the second quarter (July-September), while analysts had expected a profit, according to the consensus established by Bloomberg.
Its quarterly revenue fell to 18 billion euros, down 5% year-on-year. “Faced with the gravity of the situation, Nissan is taking urgent steps to reverse course and create a more responsive and resilient company, capable of rapidly adapting to market developments,” the group said in a press release.
And the cuts will be heavy. Nissan wants to “reduce fixed costs by 1.8 billion euros compared to the 2024-2025 financial year and variable costs by 6.8 billion euros,” the group said. “To achieve this goal, Nissan will reduce its global production capacity by 20% and its global workforce by 9,000 jobs, implementing various measures to reduce” costs and “prioritizing investment in research,” it added.
Concerns about American customs tariffs
As a result, the Yokohama-based manufacturer has significantly lowered its forecast for the full 2024-2025 financial year which ends at the end of next March. And no annual forecast of net profit is given anymore: “This will be determined based on the evaluation of the costs generated by the recovery efforts,” warned the group’s executive director, Makoto Uchida.
Nissan’s sales particularly suffered in the United States, a crucial market where it sold just 212,000 units in the July-September period, down 2.3% year-on-year. The producer wants to “rebuild its brand” there, according to Makoto Uchida. But the executive director remains cautious in the face of the drastic increase in American customs duties promised by Donald Trump, re-elected to the White House. “We export a significant number of vehicles from Mexico to the United States, this year it should be around 300,000 units,” said Makoto Uchida. “We hear about customs tariffs, but we are not the only ones affected. We will apply pressure and maintain the direction of our medium and long-term plans, monitoring the situation very carefully,” he acknowledged.
Another key market in difficulty: China, where Nissan’s quarterly sales fell 13% to 172,000 units. The group, like its Western rivals, is subject to strong competition from Chinese manufacturers, leaders in the booming electric car market. And in Europe, Nissan’s quarterly sales fell 5.9 percent, to 80,000 vehicles sold.
To catch up, the group plans to launch new electric cars in China and hybrid and plug-in electric models in the United States, while reducing the development time of new models to 30 months.
Time.news Interview: Analyzing Nissan’s Recent Challenges and Future Prospects
Interviewer (Time.news Editor): Thank you for joining us today, Dr. Tanaka. With Nissan’s recent report of a €56 million net loss last quarter, what’s your initial reaction to this unexpected downturn?
Dr. Tanaka (Automotive Industry Expert): Thanks for having me. It’s certainly concerning, especially coming at a time when many in the industry anticipated a profit. This loss signals some serious challenges for Nissan, particularly given the stiff competition in the automotive market and the ongoing shifts toward electric vehicles.
Interviewer: Absolutely. The article mentions that Nissan’s revenue fell by 5% year-on-year. What aspects do you think contributed most to this decline?
Dr. Tanaka: There are likely a number of factors at play. First, there’s the impact of global supply chain disruptions, which have been felt across the industry. Second, Nissan is traditionally strong in the sedan market, but consumer preferences are shifting towards SUVs and electric vehicles. They may be slow in adapting to that change, resulting in lower sales.
Interviewer: The company announced heavy cuts; reducing fixed costs by €1.8 billion and variable costs by €6.8 billion. How significant are these measures in terms of their potential impact on Nissan’s financial health?
Dr. Tanaka: These cuts are quite drastic and indicate a serious response to current financial struggles. Reducing global production capacity by 20% and letting go of 9,000 employees is not just a cost-cutting measure—it’s a sign that Nissan needs to fundamentally rethink its strategy. While these measures may help in the short term, they could also impact their ability to innovate and respond to market changes in the future.
Interviewer: They’ve also mentioned prioritizing investment in research despite these cuts. How important is this balance between cost reduction and innovation?
Dr. Tanaka: It’s crucial. In today’s rapidly evolving automotive landscape, investing in technology—especially electric and autonomous vehicles—is vital for long-term survival. If Nissan focuses solely on cutting costs at the expense of innovation, they risk falling further behind competitors who are aggressively pursuing advancements in these areas.
Interviewer: There are also concerns about American customs tariffs affecting their operations. Do you think this poses a significant risk to Nissan’s recovery efforts?
Dr. Tanaka: Yes, tariffs can have substantial consequences for manufacturers, especially when operating in the U.S. market. Increased costs can squeeze margins further and reduce competitiveness. If Nissan is unable to navigate these tariff challenges effectively, it might jeopardize their recovering efforts and overall growth plans.
Interviewer: In light of this situation, what do you believe Nissan needs to focus on in the immediate future to stabilize and rebound?
Dr. Tanaka: They need to focus first on restructuring their operations to become more agile. This includes reevaluating their product lineup to better align with market demands, improving their supply chain resilience, and committing to their R&D initiatives. Ultimately, they must create a culture that embraces change and innovation if they want to thrive.
Interviewer: Thank you, Dr. Tanaka, for providing valuable insights into Nissan’s current situation. It will be interesting to see how they navigate these challenges moving forward.
Dr. Tanaka: Thank you for having me. It’s a pivotal moment for Nissan, and many will be watching closely.
