Nissan Motor Co. said Thursday it will cut 9,000 jobs and 20% of its global manufacturing capacity as it seeks to cut costs by $2.6 billion this fiscal year against the backdrop of weak sales in China and the United States.
The plan highlights the vulnerability of Japan's third-largest automaker, which has yet to fully recover from the turmoil that led to the ouster of former chairman Carlos Ghosn and the winding down of its partnership with Renault in 2018.
Nissan Motor Co. on Thursday cut its full-year profit forecast by 70% to 150 billion yen ($975 million), the second downward revision this year. Like many foreign automakers, the company is struggling in China. In China, BYD and other local manufacturers are taking market share with affordable EVs and hybrids that boast advanced technology.
But Nissan's more serious problem may lie in the United States. There is a lack of reliable hybrid vehicle lineups in the United States. This is in contrast to Japanese rival Toyota, where demand for gasoline and gasoline hybrid vehicles is rapidly increasing.
Nissan misread the demand for hybrid cars in the United States, Chief Executive Officer Makoto Uchida said at a press conference.
Regarding hybrid EVs, he said, “I never expected that HEVs would spread so quickly.''
“We started to see this trend toward the end of last year,” he said, adding that some changes to core models did not go as planned.
The Yokohama-based company plans to cut 9,000 jobs, or 6.7% of its 133,580 employees worldwide.
The company withdrew its net profit forecast and announced that ongoing restructuring efforts will help it cut costs by 400 billion yen ($2.6 billion) this fiscal year.
Salary reduction, line speed
Mr. Uchida announced that he would voluntarily forfeit 50% of his monthly salary starting this month, and other executive committee members would also voluntarily take pay cuts.
Nissan announced it will cut production capacity by 20%, shorten vehicle development lead time to 30 months and deepen cooperation with partners including Renault and Mitsubishi Motors.
Mr. Uchida did not provide details on when or where the layoffs or production cuts would be made.
Nissan also plans to sell up to 10% of its Mitsubishi Motors shares, raising up to 68.6 billion yen ($445.45 million).
The company has 25 vehicle production lines around the world and plans to reduce their maximum production capacity, manufacturing manager Hideyuki Sakamoto told reporters.
One way is to change a factory's line speeds and shift patterns, he said.
Operating profit for the July-September second quarter fell 85% to 31.9 billion yen, well below the LSEG consensus estimate of 66.8 billion yen.
Nissan's global sales in the first half of its fiscal year fell 3.8% to 1.59 million vehicles, mainly due to a 14.3% decline in China.
Sales in the United States decreased by approximately 3% to approximately 449,000 units. Together, these two markets account for nearly half of Nissan's global sales.
Honda Motor Co. on Wednesday reported unexpected results of a 15% drop in second-quarter operating profit due to a sharp drop in sales in China, sending shares of Japan's second-largest automaker down 5%.
