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Nissan Is In Worse Shape Than We Thought

Industry News / 14 Comments

Drastic action has been taken to ensure Nissan's survival.

Nissan is in serious trouble right now, as the company continues to struggle after Carlos Ghosn's arrest. As we reported a couple of months ago, the automaker forecasted a 28 percent drop in its annual operating profit. The Japanese automaker has just published its first-quarter results for the 2019 financial year, and it makes for grim reading.

In the three-month period from April-June, Nissan's net income fell by 94.5 percent to 6.4 billion yen ($59 million), while operating profit fell to 1.6 billion yen ($14 million). According to Nissan, profits were negatively affected by the decrease in revenues and other external factors such as raw material costs, exchange rate fluctuations, and investments to meet new regulations.

Global unit sales decreased by six percent to 1.23 million units and sales are also down in every market apart from China. In Japan, Nissan's sales decreased by 2.6 percent to 126,000 units but increased by 2.3 percent in China to 344,000 units. US sales, on the other hand, totaled 351,000 units as Nissan continues to offer heavy discounts, while Nissan's sales in Europe, including Russia, fell by 16.3 percent to 135,000 units.

In other markets including Asia and Oceania, Latin America, the Middle East, and Africa, Nissan's sales decreased 13.1 percent to 174,000 units. Consequently, Nissan has announced it will be cutting 12,500 jobs worldwide by March 31, 2023. According to Automotive News, around 6,400 job cuts are already underway at eight locations worldwide through the end of the current fiscal year ending March 31, 2020. Of these, 1,420 job cuts will be in the US.

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As part of Nissan's survival plan, global production capacity will also be reduced by 10 percent by the end of the fiscal year 2022. Its model range will also be reduced by at least 10 percent by the end of the fiscal year 2022 as Nissan plans to focus investment on "global core models and strategic regional models."

In the future, Nissan says it will invest heavily in technologies such as its ProPilot driver assist and electrified powertrains, including battery electric models. The automaker will also continue to expand into new business areas, including ride-sharing mobility services.