Nissan lays off 9000 jobs amid a companywide financial crisis. The company is set to reduce its overall costs by 3.9 billion AUD in an attempt to recover their drastic 2024 losses.
NISSAN CUTS BACK
Nissan previously lowered its financial targets earlier this year but is forced to repeat this in light of their year-long performance. Its first cut of projected profits was from 600 billion yen (5.9 billion AUD) to 500 billion Yen (4.8 billion AUD). Then, from its succeeding target of 500 billion Japanese Yen, the auto giant has slashed this target by 70 per cent, down to only 150 billion Yen (1.5 billion AUD) for the entirety of 2024. Both analysts and Nissan itself anticipated a better financial performance from the company.
Poor financial performance from the year 2024 has prompted the company to take drastic cost-cutting measures. Cutting production capacity by 20 per cent, Nissan plans to lay off thousands of its employees globally. The employee layoff will affect thousands of jobs worldwide, approximately 6.7 per cent of their total global workforce. However, Nissan has not yet specified when or where the layoffs will take place. Nissan employees worldwide now face uncertainty. However, in its US offices, the company offered “voluntary separation programs” to curb the incoming layoffs and job insecurity among its employees.
According to Bloomberg News, the layoff caused an unfortunate domino effect, dragging down Nissan’s shares by 6 per cent.
Prior to this, Nissan had a stake of 34 per cent in Mitsubishi Motors. The company will sell 10 per cent of this back, reducing their overall shares. Opposed to this, the company is planning to reacquire its shares that were previously sold to Renault.
According to analysts, however, this move could be the company’s “only option” and may not be effective in the long run. “Selling Mitsubishi Motor shares will provide only modest relief to Nissan’s liquidity, making it difficult for the automaker to further repurchase its own shares,” said analysts from Jefferies International Ltd.
CEO Makoto Uchida released a statement regarding their extreme measures. “Nissan will restructure its business to become leaner and more resilient, while also reorganizing management to respond quickly and flexibly to changes in the business environment.”
POOR PERFORMANCE
Analysts initially projected at least 66.8 billion Yen (6.5 billion AUD) in Nissan’s profits for September 2024. Unfortunately, Nissan only raked in 32.9 billion Yen (3.2 billion AUD). Comparatively, the company’s profits are 85 per cent down from 208.1 billion Yen (2.04 billion AUD) last year. Nissan’s own stocks have plummeted by 32 per cent this year.
The company’s lowering profits are caused by poor global sales performances, especially within China and the USA. Sales in China were down by 14.3 per cent in the first half of 2024. China’s auto market and demand are shifting quickly to electric cars, which is only a starting venture for the Japanese auto giant. Earlier this year, Nissan shut down its production plant in Changzhou due to poor sales and stiff competition with local manufacturers.
Uchida’s initial plans for Nissan since his 2019 takeover included a lineup of electric vehicles (EV). Among his lofty goals, the CEO aimed for Nissan to sell an additional 1 million cars by the year 2027. Analysts have previously criticised the company’s EV lineup for being lacking.
Meanwhile in the USA, increasing demand for EVs and growing manufacturing costs have pushed Nissan into a corner. The company has one of the least EV options in the current American car market. Americans are now looking for more hybrid electric vehicles (HEV), a product Nissan is significantly lacking. Uchida admitted to this oversight in a recent press briefing. “We didn’t foresee HEVs ramping up this rapidly,” the CEO said.
Despite current financial troubles, Nissan plans to improve its performance by becoming “leaner and stronger.” Uchida’s outlook for the remaining fiscal year reflects an attitude for resiliency. “We’re committed to enhancing the competitiveness of our products and setting Nissan back on a path of growth,” he added.
While Nissan lays off 9000 jobs worldwide, EV demand continues to differ across continents. Due to this, Nissan is not the only organisation to readjust its year-end goals or cutdown production.
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