Nissan Motor Company announced on Thursday that it will implement significant cost-cutting measures, including the elimination of 9,000 jobs and a 50% reduction in CEO Makoto Uchida’s monthly pay. These steps come in response to declining financial performance and the need for urgent actions to turn the company around. In its latest news release, Nissan revealed that decreased consolidated net revenue, global sales volumes, and an operating profit margin of just 0.5% were key drivers behind these decisions.
The company is facing what it described as a “severe situation” and has laid out a strategy to achieve “healthy growth.”
“We are taking urgent measures to restructure our business, aiming to become leaner and more resilient, and to swiftly respond to changes in the business environment,” said CEO Makoto Uchida. He emphasized that the turnaround efforts are not a sign of shrinking but a necessary step to enhance the competitiveness of Nissan’s products and set the company back on a path of growth. The plan includes reducing fixed costs by 300 billion yen (over $1.9 billion) and variable costs by 100 billion yen ($649 million) while maintaining healthy free cash flow.
To meet these financial goals, Nissan will cut global production capacity by 20% and implement strategies to lower general and administrative expenses, rationalize its asset portfolio, and prioritize capital expenditures and investments in research and development. Other executive committee members have also volunteered to take pay cuts, aligning with the company’s cost-saving measures.
Nissan announces significant cost-cutting measures
“As a cohesive team, we are dedicated to ensuring the successful implementation of our plans,” Uchida added. Nissan experienced a drop in multiple financial metrics during the first half of Fiscal Year 2024 compared to the same period last year, including net revenue, operating profit, operating margin, ordinary profit, and net income. Global sales volumes fell year-on-year to 1.6 million units.
Profitability was impacted by higher selling expenses, inventory optimization efforts in the US, and rising monozukuri costs, among other factors. To counter these challenges, the company plans to accelerate the introduction of new energy vehicles in China, plug-in hybrids, and e-POWER vehicles in the United States, while also reducing vehicle development lead time to 30 months. Nissan aims to forge strategic partnerships in technology and software services and will utilize its alliances with Renault Group, Mitsubishi Motors Corporation, and Honda Motor Company to strengthen its position.
Additionally, a new chief performance officer responsible for sales and profit will be appointed by December 1. Nissan’s ultimate goal is to “create a leaner, more resilient business capable of swiftly adapting to changes in the market,” Uchida concluded.
