Nissan's Latest Cost-Cutting Move Won't Be Popular


At least by its American employees.

While the all-new 2020 Nissan Sentra, revealed late last month the 2019 LA Auto Show, is an impressive car, the automaker is doing worse than expected in the always important US market. A turnaround plan is currently being put in place and cost-cutting measures are being enacted. As new product development is set to receive a bulk of future investments, Nissan has made the decision to cut back on employee expenses such as travel. And there's more: a two-day unpaid furlough next month.

According to Automotive News, every single one of the automaker's employees will have two unpaid days off next month. No exceptions for anyone. The decision was made by Nissan North America Chairman Jose Valls. "While we've made some positive progress, Nissan's performance has fallen short of our expectations," Valls stated in a company-wide memo sent to employees this week.

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"Effective immediately," Nissan will also cut employee travel expenses by 50 percent. The two unpaid days will happen on January 2 and January 3. This will result in a 9.2 percent pay cut for employees next month. The company-wide shutdown will also include its assembly plants in Tennessee and Mississippi alongside its corporate headquarters in Nashville. Even Infiniti, the company's finance division, Nissan Motors Acceptance Corp., an engineering research center in Michigan, and its design studio in San Diego are included.

"I realize this news may be unsettling and that it will affect your personal lives and families," Valls said in the memo, but his decision is certainly better than layoffs, especially during the holiday season. As of now, no layoffs are planned.

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Last month, Nissan's US sales dropped by 16 percent compared to a year earlier. Infiniti saw a 33 percent decrease. Through November, overall Nissan North America sales are down by 7.8 percent. The automaker aims to pivot away from reliance on fleet sales and retail incentives, the latter being especially unpopular among dealerships. Why? Because there's very little, if any, profit leftover in many cases.

"We have taken a number of measures this fiscal year to try to fix the fundamentals and right-size the business to improve our results," Valls added. These cost-cutting measures, while painful, will hopefully help put Nissan back on the right track.

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