Latest news with #RevivalPlan
Yomiuri Shimbun
4 days ago
- Automotive
- Yomiuri Shimbun
Nissan Plant ‘Closures': Break away from Negative Cycle and Step up Alliance Strategy
Nissan Motor Co., which has been restructuring its operations, has decided on large-scale closures of its domestic plants for the first time in a quarter of a century. The company should minimize the impact on the local economy around the plants and at the same time hasten a strategy to seek a new alliance partner. Nissan has announced that it will end compact car production at its Oppama plant in Yokosuka, Kanagawa Prefecture, at the end of fiscal 2027. This will effectively be a plant closure. Production of commercial vehicles at a subsidiary's plant in Hiratsuka in the same prefecture will also end in fiscal 2026. Nissan posted a ¥670.8 billion net loss for the fiscal year ending March 31, 2025, due to sluggish global sales. In May, when it announced its financial results, Nissan said it would close seven of its 17 vehicle production plants worldwide. The closure of the Kanagawa Prefecture plants is a part of such efforts. The Oppama plant, which began operations in 1961, is a symbol of Nissan's history, having produced its models including the 'March' and 'Bluebird.' There are said to be about 2,000 companies that do business with Nissan in the prefecture, and the impact on the local community will be significant. It is hoped that Nissan, in close cooperation with local governments and other entities, will take detailed and meticulous measures to alleviate concerns over its restructuring plan, such as by helping employees find new jobs at its business-partner companies and helping small and midsize enterprises procure funds. As a result of this restructuring, Nissan's domestic vehicle production plants will be consolidated into a total of three locations, one in Tochigi Prefecture and the other two in Fukuoka Prefecture. The management team needs to work to rebuild its business so that further restructuring will never occur. In recent years, Nissan's management has fallen into a negative cycle of declining brand power and development capabilities, and sluggish sales. Under its 'Revival Plan,' the large-scale restructuring measures launched by former President Carlos Ghosn in 1999, Nissan achieved a V-shaped recovery in business performance. The company then formed an alliance with France's Renault SA and Mitsubishi Motors Corp. that leapt to become the world's second-largest automotive alliance in the 2010s. However, as a result of pursuing an increase in sales with an unreasonable expansion policy, Nissan's product quality and development capabilities declined. Its brand power also deteriorated through its low-margin, high-volume business approach. It is now said that Nissan has no 'well-selling models' to attract consumers. The company's leadership should reflect sincerely on the chaotic management of the past. Its business will not stabilize unless Nissan proceeds with strengthening its product development capabilities, as well as making thorough efforts to 'stop the bleeding.' The most important issue going forward will be to find a new alliance partner. As the capital relationship with Renault has been drastically reviewed, ties between Nissan and Renault have weakened. The development of electric vehicles and next-generation vehicles, among other products, which will be Nissan's main battleground in the future, will require massive investment. It will be difficult for Nissan to survive on its own. Automobile tariffs imposed by the administration of U.S. President Donald Trump will also be a burden. The hope is that Nissan will look for a wide range of partners, including Honda Motor Co., with which negotiations for a business merger have broken down. (From The Yomiuri Shimbun, July 18, 2025)
Yomiuri Shimbun
16-05-2025
- Automotive
- Yomiuri Shimbun
Nissan Motor's Restructuring: Provide New Strategy for Turnaround
Nissan Motor Co. intends to go through its first major restructuring in a quarter of a century. As the automobile industry has a broad manufacturing base, the impact on the Japanese economy will be significant. The company should draw up a strategy for a turnaround at an early stage. 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)
