Nissan isn't mincing words as it announces major steps to reposition itself strategically. The struggling automaker says it's "facing a severe situation" and "taking urgent measures to turnaround its performance and create a leaner, more resilient business capable of swiftly adapting to changes in the market."
Nissan's admission came as it reported financial results for the first half of the 2024 fiscal year last week. Reuters reports that Nissan's global sales fell 3.8% in the first months of the six year, largely due to declining sales in China. U.S. sales are an issue as well, falling almost 3%, due to Nissan's lack of hybrids in its lineup, something the automaker acknowledges and plans to rectify.
As a result, Nissan says it will cut 9,000 jobs globally and reduce manufacturing capacity by 20%. Nissan also says CEO Makoto Uchida will voluntarily forfeit 50% of his monthly compensation starting in November 2024 and the other executive committee members will also voluntarily take a pay reduction accordingly.
You can read more about Nissan's turnaround actions in its press release here.
In another move announced separately, Nissan is selling part of its stake in Mitsubishi back to Mitsubishi. Mitsubishi is acquiring 10 percent of Nissan stock in the company, reducing Nissan's current 34.07% stake in the automaker. The two companies say they'll continue to collaborate.
MY TAKE:
As someone who watches the auto industry every single day, car companies making strategic moves never comes as a surprise. However, drastic, severe changes like at Nissan always come as a bit of a shock. I assume the situation at Nissan was more dire than I expected, OR they are being hyper-proactive, one of the two. Either way, if the plans the company announced last week come to fruition, Nissan will be a much smaller car company. I could be wrong, and this is pure speculation, but I wonder if Nissan isn’t looking at Mazda, wanting to be more like them.
Mazda has stayed small on purpose and hasn’t tried to be a Toyota or Honda. Mazda made a plan to move upscale in its products, keep a sharp eye on quality, and they have stuck with the plan diligently. We reported here last week that October Mazda sales were up 53% over last October.
So, what becomes of Mitsubishi? Who knows if Nissan selling off a large stake will affect them or not? I’ve watched Mitsubishi have ups and downs in the U.S. for decades, and the company seemed to have been gaining momentum, building quality products at prices that undercut the competition. The timing of Nissan partially bailing out probably wasn’t the best. Nissan’s stake in Mitsubishi is now under 25%, so it is doubtful Nissan will have much influence in decisions made by Mitsubishi.
As an automotive journalist, the scope of the announced cuts at Nissan boggles the mind. 9,000 workers will lose their jobs, reducing fixed costs by almost 2 billion dollars, the CEO cutting his own pay in half. These are drastic. For me, the questions are: Are things really bad enough to warrant these actions? Should smaller, less severe cuts have been made sooner? Will these cuts return Nissan to a fiscally successful automotive giant?
Stay tuned. Time will tell.
Photo: Nissan reports first-half results for fiscal year 2024. November 7, 2024. Credit: Nissan Motor Co..