Nissan Motor's Restructuring: Provide New Strategy for Turnaround
Nissan has announced its consolidated financial results for the fiscal year ending March 31, 2025, and it reported a net loss of ¥670.8 billion. This is the third-largest deficit in its history. The company's forecast for the fiscal year ending March 31, 2026, also shows that its operating profit will decrease by up to ¥450 billion due to tariff measures imposed by U.S. President Donald Trump.
In the large-scale restructuring measures, announced at the same time, the automaker plans to close seven of its 17 vehicle production plants worldwide by fiscal 2027. The company explained that a total of five domestic plants in Kanagawa, Fukuoka and Tochigi prefectures will also be targets of consideration.
If Nissan pushes ahead with these large-scale closures of its plants in Japan, it will be the first time in a quarter of a century, since the closure of the Murayama plant in Tokyo. The automobile industry has many business partners. The negative impact on employment and the economy in local communities would be significant and anxiety could spread.
Nissan has long been at the core of the Japanese automobile industry, selling about 5.8 million units worldwide in fiscal 2017.
In response to sluggish sales, Nissan will review its excessive production system and reduce its annual production capacity by 500,000 units to 2.5 million units worldwide, excluding China. The company will also reduce its workforce by about 20,000 people, equivalent to 15% of the workforce, at its bases in various countries around the world.
This large-scale restructuring is shocking because it is comparable to the 'Revival Plan,' a bold restructuring measure launched in 1999 under the leadership of former President Carlos Ghosn.
The concern is that, unlike the 1999 restructuring measure, there is no clear path toward a post-restructuring turnaround.
In December last year, Nissan announced its policy of integrating its operations with those of Honda Motor Co. as a strategy to tackle what has been described as a once-in-a-century time of transformation. But the plan broke down after only 1½ months. Three months later, Nissan has announced its latest plan for a major restructuring. The management's chaos is simply unbearable to see.
The biggest reason for Nissan's predicament is the lack of 'well-selling models' to attract consumers.
It has been pointed out that Nissan has continued to offer excessive discounts in an effort to increase sales volume, thereby undermining the value of its brand. The company's product development capabilities have also declined, and the management was unable to operate flexibly in terms of introducing products.
Nissan has been lagging behind in marketing its models of hybrid vehicles in the U.S. market where there is a growing need for such vehicles. First of all, the company will have no choice but to hasten its return to a profitable structure and continue to strengthen its product development capabilities.
The global automobile industry is likely to shift to electric vehicles in the medium to long term. It will be difficult for a company to survive on its own as huge research and development costs are required. A new alliance strategy will probably be needed.
(From The Yomiuri Shimbun, May 16, 2025)
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