Nissan cuts 9,000 jobs and halves CEO’s pay as profits slump

Nissan has launched an emergency turnaround plan that includes 9,000 job losses and a voluntary 50 per cent pay cut for chief executive Makoto Uchida after unveiling another profit downgrade.
Japan’s third-largest carmaker said it would slash global production capacity by 20 per cent in an attempt to reduce fixed costs by ¥300bn (€1.8 billion) and variable costs by a further ¥100 billion.
Nissan has been plunged into crisis since it lacks the hybrid vehicles that have helped rivals Toyota and Honda. It has also suffered from cut-throat competition from Chinese electric vehicle producers in the world’s largest car market.
The troubles at Nissan signal further pressure on the global car industry after Volkswagen told workers it planned to close several plants in Germany for the first time in its 87-year history.
As part of the measures, Nissan also cut its stake in Mitsubishi Motors from 34 per cent to 24 per cent to bolster its balance sheet.
Nissan, which has a long-standing alliance with France’s Renault, has recently turned to a partnership with Honda to roll out a new electric vehicle before the end of the decade and jointly develop software to go toe-to-toe with Chinese rivals.
The company lowered its production forecast for the full year to 3.2 million cars, down from a previous forecast of 3.45mn, and slashed its annual operating profit forecast by 70 per cent to ¥150 billion.
“Facing a severe situation, Nissan is taking urgent measures to turn around its performance and create a leaner, more resilient business,” the company said in a statement.
The job cuts represent almost 7 per cent of Nissan’s workforce, which was 133,580 at the end of its previous financial year.
Operating profit decreased by 90 per cent to ¥32.9 billion in the six months ending in September, on revenues that dropped 1.3 per cent to ¥6 trillion.
The profit downgrade is Nissan’s second of the financial year after it lowered its full-year forecast when reporting its first-quarter earnings.
“This has been a lesson learned and we have not been able to keep up with the times,” said Mr Uchida in a press conference in Tokyo.
Mr Uchida said the company needed a greater focus on its alliances with Honda and Mitsubishi to steady the business and build competitiveness.
The group plans to overhaul its ageing line-up of vehicles by launching new EVs in China and plug-in hybrids in the US.
A new role of chief performance officer will be introduced from December, responsible for sales and profit in a bid to make swift decisions for a turnaround. – Copyright The Financial Times Limited 2024