Nissan Motor Company has announced plans to cut 9,000 jobs worldwide and reduce the monthly pay of its CEO by 50% as the company faces declining financial performance. CEO Makoto Uchida offered to immediately forfeit half of his monthly compensation, with other executive committee members also volunteering for pay cuts. In a statement, Uchida emphasized that these actions are intended to make Nissan leaner and more resilient while enhancing the competitiveness of its products.
The planned measures come after Nissan’s first-half Fiscal Year 2024 financial results showed decreased consolidated net revenue and global sales volumes, and an operating profit margin of just 0.5%. To address these challenges, Nissan plans to reduce fixed costs by over $1.9 billion and variable costs by $649 million while maintaining healthy free cash flow. The restructuring will see a 20% cut in global production capacity.
The company will also implement various measures to lower expenses, rationalize its asset portfolio, and prioritize investments in research and development. “We aim to enhance the competitiveness of our products and set Nissan back on a path of growth.
Nissan announces major job cuts
As a cohesive team, we are dedicated to working together to ensure the successful implementation of our plans,” Uchida said. During the first half of FY24, the company experienced a decline in net revenue, operating profit, operating margin, ordinary profit, and net income compared to the same period in 2023. Global sales volumes also fell to 1.6 million units year-on-year.
The company attributed its reduced profitability to higher selling expenses, inventory optimization efforts, particularly in the US, and rising production costs. Uchida noted that Nissan plans to advance the introduction of new energy vehicles in China, as well as plug-in hybrids and e-POWER models in the United States. The restructuring will also emphasize reducing vehicle development lead time to 30 months with the ultimate goal of creating a more resilient business capable of adapting swiftly to market changes.
Nissan also plans to explore strategic partnerships in technology and software services. Additionally, Nissan will appoint a Chief Performance Officer responsible for sales and profit, who will begin working in the role by December 1. Overall, Uchida expressed optimism that these turnaround measures would set Nissan back on a growth trajectory, strengthening its market position and product offerings.
