Nissan Motor: Nissan Motor Co.’s challenges to cope with tougher automobile industry conditions and resolve internal flaws have worsened, forcing the carmaker to cut payroll, production, and estimates for this fiscal year.
On an intraday basis, shares of the Japanese manufacturer tumbled the highest since August after it announced plans to lay off 9,000 people and reduce a fifth of its manufacturing capacity after net income collapsed 94% in the first half. Nissan plans to sell a portion of its interest in Mitsubishi Motors Corp. after spending ¥448.3 billion ($2.9 billion) in cash over the past six months.
Nissan Motor: Nissan shares tumbled
Nissan shares tumbled as much as 10% in early morning Tokyo trade on Friday, reaching their lowest level since October 2020.
CEO told investors
The disastrous consequences will be costly for Chief Executive Officer Makoto Uchida, who will lose half of his salary beginning this month. The CEO informed investors that Nissan had been harmed “not only by outside factors, but also by our individual issues,” pointing to the rapid rise of Chinese automakers as well as Nissan’s extremely aggressive sales targets.
“Meeting our sales goals will be difficult,” Uchida stated. “We must restore our strength so that we can pivot toward a more favorable direction.”
Nissan’s operational income is expected to fall
Nissan’s operational income is expected to fall to ¥150 billion in the fiscal year ending March, a 70% decrease from the prior prediction. Management also reduced their sales outlook by more than 9%, implying that they now foresee virtually no growth this year.
Uchida has led Nissan since 2019, when the company faced an existential crisis following the departure of former chairman Carlos Ghosn. He’s struggled to right the ship under intense competition from Tesla Inc. and China’s BYD Co., leaving the company a behind among big Japanese manufacturers.
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“Nissan is the weakest one,” says James Hong, a consultant at Macquarie Securities Korea. “The only way for a business to improve sales is through price cuts.”
According to Bloomberg Intelligence, states,
Nissan’s grades appear to be on thin ice following a grim fiscal 2Q25 result and a self-assessment of its extremely difficult situation.
— Joel Levington, Director of Credit Research at BI
Nissan will sell nearly a third of its interest in partner Mitsubishi Motors, reducing it to little more than 34%. Nissan’s 10% stake in the Tokyo Stock Exchange was valued at over ¥68.6 billion as of Thursday’s trade close.
Uchida is around eight months into a three-year turnaround plan to revitalize the company, though Nissan had to backtrack slightly earlier this year. In July, the business reduced its 2017 operating profit projection to ¥500 billion from ¥600 billion, citing low sales in China, Japan, and North America.
The profit for the September quarter was ¥32 billion, which fell short of the consensus projection of ¥65 billion and much further from the ¥208 billion generated last year.
“The decline in second-quarter profit was not unexpected, but the figure was even lower than expected,” observed Bloomberg Intelligence analyst Tatsuo Yoshida. “The primary challenge is the gap between what the company wanted to achieve, and what was realistically possible.”
Uchida’s ambitions include extending Nissan’s electric vehicle lineup, forming new collaborations, and selling an additional 1 million cars annually by 2027. However, analysts have stated that the company’s new lineup lacks enough hybrid cars, posing a significant challenge as consumer demand for EVs declines.
“The desire for hybrids is what’s allowing Toyota and Honda to enjoy great profitability,” Macquarie’s Hong said. “That strategy also needs to be revisited.”
Nissan, like many major legacy automakers, is struggling in China, the world’s largest vehicle market. In June, the business announced that it would discontinue manufacturing at a Changzhou plant due to declining sales.
Nissan Motor : Nissan expects to build approximately 3.2 million vehicles March 31
Nissan currently expects to build approximately 3.2 million vehicles in the fiscal year ending March 31, which is over 7% less than the previous fiscal year. The business also reduced its retail sales target to 3.4 million vehicles, lowering expectations in each of its major markets: North America, China, Japan, and Europe.
Nissan announced a collaboration with Honda Motor Co. and Mitsubishi Motors in March to develop software, batteries, and other electric vehicle components. The arrangement might pit the trio against Toyota Motor Corp. and its partnerships with Subaru Corp., Suzuki Motor Corp., and Mazda Motor Corp.
Uchida stated on Thursday that strategic relationships with Renault SA, Mitsubishi Motors, and Honda will improve Nissan’s investment efficiency and product. He announced job layoffs totaling around 7% of Nissan’s employees.
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