Nissan Faces Operational Crisis, Announces Largest Restructuring Plan in History

Financial Performance Deteriorates

Nissan Motor Company is facing severe challenges in fiscal year 2024, with financial reports showing a shift from profit to loss. The company is responding with massive layoffs and production capacity cuts. While recent stock prices have rebounded slightly, annual performance and future prospects continue to worry investors.

Key financial figures for FY2024:

• Revenue: 12.63 trillion JPY (virtually unchanged from 12.69 trillion JPY last year)
• Operating profit plunged 87.7% to 69.8 billion JPY
• Net loss of 670.9 billion JPY (compared to profit last year)
• Global sales dropped 2.8% to 3.346 million units
• China market sales declined most sharply by 12.2%

For FY2025, Nissan forecasts:

• Revenue to decrease to 12.5 trillion JPY
• Global retail sales to further decline to 3.25 million units

Largest Restructuring Plan in Company History

Newly appointed CEO Ivan Espinosa has unveiled an ambitious restructuring plan:

Cost Control & Financial Targets:

• 500 billion JPY in cost savings from FY2024 baseline
• Target to achieve positive operating profit and free cash flow in automotive business by FY2026

Workforce Reductions:

• Plan to cut 20,000 jobs between FY2024-2027 (15% of total workforce)
• Far exceeds previously announced 9,000 job cuts
• Affects manufacturing, sales, administration, and R&D departments

Production Optimization:

• Consolidate vehicle assembly plants from 17 to 10
• Streamline powertrain plants and cancel planned Kyushu LFP battery factory
• Reduce capacity to 2.5 million units by FY2027 with flexibility for additional 500,000 units
• Pause new product development beyond FY2026 to focus on restructuring
• Reduce parts complexity by 70% by FY2035 and reorganize supply chain
• Cut platforms from 13 to 7 and shorten vehicle development cycles

Regional Strategy Adjustments

Nissan is implementing differentiated strategies across key markets:

Japan Market:

• Expand model coverage
• Maintain Japan as core manufacturing base

China Market:

• Focus on new energy vehicles
• Pure electric N7 model seen as crucial for China market
• Chinese production to serve global markets through exports

North America Market:

• Focus on crossovers and SUVs
• Plan to introduce more hybrid models
• Concentrate on locally produced vehicles
• Optimize local capacity and relocate production affected by tariffs
• Work closely with suppliers to mitigate tariff impacts

Nissan's challenges reflect the complex environment of the global automotive industry, particularly impacted by sales declines, failed collaboration with Honda, and U.S. tariff pressures. The company's stock has significantly declined over the past year, despite a 3% rise on the day the restructuring plan was announced.