Nissan Reduces Workforce by 9,000 and Lowers Sales Forecast Amid Challenges

Nissan is set to cut 9,000 jobs and reduce its annual sales forecast drastically due to a 93% decline in net profit, predominantly driven by weaknesses in North America and increasing competition in the electric vehicle sector. The automaker aims to streamline its operations by reducing global production capacity by 20%, while also selling shares back to Mitsubishi Motors to lower its ownership stake. CEO Uchida announced his voluntary pay cut and emphasized the urgency of restructuring efforts to enhance Nissan’s market adaptability.

On November 7, 2024, Nissan Motor Co. announced a significant restructuring effort, revealing plans to eliminate 9,000 jobs amid a substantial reduction in its annual sales forecast. The Japanese automaker cited urgent measures necessary to address what it described as a “severe situation” stemming primarily from a 93% decrease in net profit for the first half of the fiscal year. CEO Makoto Uchida highlighted the company’s difficulties in the North American market as a crucial challenge, compounded by increasing competition from electric vehicle manufacturers in China. Nissan aims to cut global production capacity by 20% while simultaneously targeting a leaner workforce structure. The firm has adjusted its sales expectations downward from 14 trillion yen to 12.7 trillion yen ($80 billion) and has refrained from issuing a net profit forecast, having previously downgraded it to 300 billion yen earlier in July. Uchida indicated the company’s need for a turnaround that would better align its operations with market changes, stating, “Nissan is taking urgent measures to turnaround its performance and create a leaner, more resilient business.” Additionally, Uchida stated his intention to forfeit 50% of his monthly salary as part of a broader strategy to rebalance the company, with other executive committee members following suit in salary reductions. One notable measure includes a reduction in Nissan’s stake in Mitsubishi Motors, informing that this stake will drop from 34% to approximately 24%. Despite these sweeping changes, Uchida assured that Nissan would maintain close relations with Mitsubishi. His tenure at Nissan has been marked by significant transformations, particularly following the controversial legal issues surrounding former chairman Carlos Ghosn, who remains a fugitive from justice.

Nissan has faced considerable challenges in recent years, marked by leadership turmoil and an evolving automotive landscape. The arrest of Carlos Ghosn in 2018 and subsequent developments, including his escape from Japan, have cast a long shadow over the company. Compounding these issues, Nissan is grappling with intense competition in the electric vehicle sector, particularly from Chinese companies heavily supported by their government. Additionally, the company’s ability to perform in the North American market has faltered, leading to the drastic measures announced by CEO Makoto Uchida.

In summary, Nissan’s recent announcement to cut jobs and reduce its sales forecast represents a critical response to severe financial pressures and operational challenges. By implementing these restructuring measures, including significant workforce reductions and revised sales expectations, Nissan aims to stabilize its business and regain competitiveness in a rapidly transforming automotive market. The commitment of its leadership to take pay cuts further signifies an organizational determination to emerge resilient from this crisis.

Original Source: jordantimes.com