Nissan Needs A Total Restructuring Plan to Survive
Nissan Motor Co has announced a large-scale restructuring plan that includes cutting 20,000 jobs.
The workforce reductions will amount to approximately 15% of the group's global workforce and are slated to be implemented by FY2027. The company will also close 17 vehicle production plants worldwide, including in Japan, leaving it with only 10.
Nissan is struggling due to continued sluggish sales in the world's two biggest motor vehicle markets, the United States and China. One problem is its product lineup, including the company's failure to introduce hybrid vehicles in the US market, where that vehicle type is popular.
It has also suffered from sluggish factory utilization rates and restructuring costs. Those forced the company to post a net loss of ￥670.8 billion JPY ($4.6 billion USD) for the fiscal year ending March 2025 (FY2024).
It will take time to improve the appeal of Nissan products. Moreover, the company must optimize excess equipment and personnel to turn around business performance. Unfortunately, the restructuring process will have an impact here in Japan, but that is unavoidable. Nissan Motors President Ivan Espinosa leaves the company after a press conference in Yokohama on the afternoon of May 13.
Nissan's president, Ivan Espinoza, told reporters that the job cuts are essential if Nissan is to survive. What he said is true. Under its new leadership, we look for the company to display determination to survive and strive doggedly to complete its reconstruction plan.
The motor vehicle industry is said to be undergoing a once-in-a-century transformation, and the competitive landscape is changing dramatically. That is due in part to the rise of Chinese automakers specializing in electric vehicles (EVs).
There are also concerns about the impact of additional tariffs imposed by the Trump administration on automobiles. Nissan estimates that these tariffs will result in a decline in operating profit of up to ￥450 billion ($3.1 billion) in FY2025. ホンダの三部敏宏社長（三尾郁恵撮影）
Nissan is not the only company that will see its profits squeezed by additional tariffs.
Honda Motor Co also expects its operating profit to fall by ￥650 billion ($4.46 billion) in the same period. That represents a significant decrease in profits from fiscal 2024. Also, Nissan and Honda's planned merger fell through in February. However, the two companies have maintained a strategic partnership in the field of next-generation vehicles, including EVs and software defined vehicles, known as SDVs.
Nissan's Espinosa also revealed that the company is considering collaboration with Honda in the United States. The plan is to produce Honda vehicles at Nissan's US plants.
Even without going as far as integrating the two companies, there surely are ways for Honda and Nissan to utilize each other's management resources to improve business performance. Hopefully, not only these two companies, but all Japanese manufacturers will give full play to their savvy to protect the nation's key industries.
(Read the editorial in Japanese )
Author: Editorial Board, The Sankei Shimbun
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