Nissan About To Make Some Very Tough Decisions

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Its future is at stake.

Even before the coronavirus pandemic struck Nissan was in trouble. Sales were down and it was burning through too much cash. It even forced its entire North American workforce to take unpaid vacation days last January to save money. Former CEO Carlos Ghosn once had major expansion plans for the automaker, but his firing along with COVID-19 and other factors have made that impossible. A lack of new models across the lineup doesn't help matters, though the redesigned Nissan Sentra is a solid start. However, more drastic changes are required in order for Nissan to survive.

According to Reuters, Nissan's management team will release a new and radical restructuring plan next month that will likely call for the reduction of 1 million vehicles to its annual sales.

2017-2019 Nissan GT-R Front View Driving Nissan
2017-2019 Nissan GT-R Rear Angle View Nissan
2017-2019 Nissan GT-R Front Seats Nissan

Instead of the goal of 6 million vehicles in annual sales outlined last July by another former CEO, Hiroto Saikawa, 5 million is now a more realistic figure. Ghosn was aiming for 8 million. This new plan will last until March 2023 and because of the far lower annual sales goal, this will produce a ripple effect across the board. Lower sales also mean lower production.

Therefore, it's possible at least three (if not more) assembly plants will be closed. More jobs will be lost in addition to the already announced plans to cut back its workforce by 10 percent. These cutbacks will also be felt by suppliers and Nissan dealerships.

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Front Angle View Nissan
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Central Console Nissan

"For years, Nissan was looking for annual sales volumes around 7-8 million vehicles. The company has never managed to sell much more than 5 million or so," an anonymous Nissan source told Reuters. "The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020-2022."

The main takeaway here is that Nissan is about to downsize. Doing so will hopefully help it get back on track though it won't happen overnight. Painful cuts will be required though it's still too soon to know whether any future vehicles, such as the next-generation Nissan GT-R and the already in development new Z-car, will be sacrificed. But the alternative to not downsizing is simply unacceptable.

2017-2020 Nissan Rogue Front Angle View Nissan
2018-2020 Nissan Kicks Front Angle View Nissan
2019-2020 Nissan Altima Front Angle View Nissan
Source Credits: Reuters

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