As it works on a significant cost-cutting initiative to address weakening sales in China and the United States, Nissan has declared intentions to lay off 9,000 people globally. One of the biggest automakers in Japan, the business warned that this choice would also result in a 20% global output cut, influencing operations all around.
Although specifics on the locations of these job losses have yet to be revealed, Nissan’s production facility in Sunderland, North East England, employs about 6,000 people in the United Kingdom.
Why Has Nissan Slashed Its Profit Forecast by 70%?
In its most recent updates, Nissan also revealed a significant reduction in its 2024 operational profit estimate, cutting expectations by 70%. This represents the second downward revision this year, underscoring the company’s continuous challenges.
“While these turnabout measures may seem extreme, they do not imply that the company is shrinking,” said Nissan Chief Executive Makoto Uchida. “Nissan will restructure its business to become leaner and more resilient.”
Apart from a more general reorganization, Uchida’s monthly remuneration would be half slashed, and other top executives are also likely to receive pay cuts. This action seeks to demonstrate leadership responsibility during significant corporate transformation. After the disclosures, Tokyo trading for Nissan’s shares on Friday morning dropped nearly 6%.
How Has Competition in China Affected Nissan?
Nissan has been battling rising difficulties in China, the biggest automotive market in the world, where indigenous rivals like BYD have become front stage. Rising demand for electric cars (EVs) in China has left global automakers unable to keep up. As Chinese enterprises quickly increase their capacity for EV production, international producers have both dropping pricing and a smaller market share.
A China-based automotive sector observer claims that Nissan’s slow adaptation to the EV trend has affected its performance in China. “Nissan, like many Japanese automakers, has been quite slow to the electrified vehicle party in China; this is shown in their results,” the analyst said.
What Challenges Is Nissan Facing in the U.S. Market?
Nissan’s problems go beyond China. The company has also suffered from declining demand in the United States, where high borrowing rates and inflation have discouraged consumer desire for new car purchases. Like other automakers, Nissan has been pressured to lower prices as the general demand for vehicles has declined, affecting passengers.
Why Is Nissan Investing in Its Sunderland Plant Despite Global Cutbacks?
Despite the significant cuts and layoffs, Nissan has underlined its dedication to developing its electric vehicle range. Last year, Nissan and its partners revealed a £2 billion ($2.6 billion) investment plan to establish three new electric car models at the Sunderland UK facility. Along with the next generation of the electric Leaf, which is now manufactured at the Sunderland facility, these will feature electric variations of its popular Qashqai and Juke models.
Nissan’s reorganization seeks to balance long-term market changes with urgent financial demands to stay competitive in a sector where local manufacturing champions in major markets like China increasingly rule and electric vehicles dominate.
