Nissan’s Dim Performance Forces Major Restructuring 日產汽車 (Nissan) announced on Tuesday (May 13) a dismal performance in their 2024 fiscal year financial report, impacted by factors such as U.S. tariffs and sluggish sales in the Chinese market. The automaker revealed plans for a new round of large-scale restructuring, aiming to cut 15% of the global workforce, about 20,000 employees, and reduce the number of factories from 17 to 10.
According to Nissan’s latest annual financial report, the net loss as of the end of March this year reached 670.9 billion yen (about $45 billion), marking the most severe loss in 25 years. Operating profit plummeted by 88%, with only 69.8 billion yen (about $5 billion) remaining for the whole year compared to a profit of 426 billion yen (about $28.4 billion) in the previous fiscal year.
The newly appointed Nissan CEO, Ivan Espinosa, described these results as a “warning bell,” stating, “The loss we announced today signifies a daunting task ahead of us.”
Espinosa added, regarding the large-scale restructuring plan, “We would not take these measures if it were not for survival.”
Nissan mentioned that the tariffs imposed by the U.S. would increase costs by 450 billion yen (about $3 billion) in the current fiscal year, but through various measures, the company can offset around 30% of the costs.
The company’s factories are primarily located in Japan, the U.S., Mexico, the UK, China, among others. Last month, Nissan confirmed the closure of their car production plant in Wuhan, Hubei Province, China. The plant, which had a capacity of producing 300,000 cars annually, saw its utilization drop to less than 10% due to sluggish sales in China. The factory is set to cease operations by the end of the 2025 fiscal year (March 2026).
The planned factory closures will bring Nissan’s annual production capacity down to 2.5 million vehicles by 2027. Last year, the company sold 3.3 million vehicles.
Espinosa declined to disclose which factories are at risk but mentioned that the review would include factories in Japan.
Meanwhile, in response to the impact of U.S. tariff policies, Nissan is withdrawing from some Chinese plants while increasing production in the U.S. They are exploring the option of shifting part of the production lines from the Fukuoka plant in Japan to the U.S., where the plant focuses on producing key models for the American market.
Nissan is also seeking new major shareholders as they recently reduced their alliance with the French Renault group after more than two decades.
Espinosa revealed that Nissan is seeking to collaborate with Renault to produce more electric vehicle models at their Sunderland plant in the UK.
Rival automaker Honda warned on Tuesday of significant impact from U.S. tariffs, estimating a loss of 650 billion yen (about $4.3 billion), yet stated they could offset around 200 billion yen (about $1.3 billion) through adjustments in production.
Honda’s CEO, Toshihiro Mibu, acknowledged the current forecast as pessimistic but expressed optimism about potential improvements with adjustments in company policies and market reactions.
(Reference to reporting by the Financial Times)