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Tokyo — Nissan Motor announced a $2.6bn cost saving plan on Thursday, including 9,000 job cuts and a 20% reduction in global production capacity as it battles falling sales in China and the US.
Japan’s third-largest automaker also cut its annual operating profit forecast by 70% to ¥150bn, its second downward revision this year. It scrapped its net profit forecast due to ongoing restructuring efforts, which Nissan said would cut costs by ¥400bn this financial year.
Nissan is among many foreign automakers struggling in China, hurt by intensifying competition from more nimble local manufacturers in the booming electric vehicle segment.
The Yokohama-based automaker is also battling slumping sales in another top market, the US, which shows no immediate signs of recovery.
CEO Makoto Uchida said the company does not have the hybrid and plug-in hybrid line-up it needs for the US market yet.
“We didn’t foresee hybrid electric vehicles ramping up this rapidly [in the US],” he said.
“We did start to understand this trend towards the end of last financial year, but the model year switching for our core models didn’t go as smoothly,” Uchida said.
In response to falling sales, Nissan plans to cut its production capacity by 20%, reduce vehicle development lead time to 30 months and deepen collaboration with its partners including Renault Group and Mitsubishi Motors, it said.
It is also selling up to 10% of its stake in Mitsubishi Motors to raise up to ¥68.6bn.
“Globally, we currently have 25 vehicle production lines. Our plan is to reduce the operational maximum capacity of these 25 lines by 20%,” said chief monozukuri officer Hideyuki Sakamoto.
“One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel.”
Of 133,580 employees, the company is planning 9,000 job cuts, losing 6.7% of its staff.
Operating profit for the July-September second quarter tumbled 85% to ¥31.9bn, far below an LSEG consensus estimate of ¥66.8bn.
Nissan’s global sales fell 3.8% to 1.59-million vehicles for the first half of the financial year, largely due to a 14.3% drop in China.
US sales fell almost 3% to about 449,000 vehicles. Together, the two markets account for nearly half of Nissan’s global sales by volume.
Honda Motor reported on Wednesday a surprise 15% drop in second quarter operating profit due to a heavy sales drop in China, sending shares in Japan’s second-largest automaker down 5%.
Meanwhile, German carmaker Audi is considering reducing its workforce in the medium term by cutting jobs outside production, with thousands of positions at risk, the Manager Magazin reported on Thursday.
The job cuts are to focus on so-called indirect jobs at the company, such as in the area of development, where more than 2,000 jobs could go, the report said.
It said the company is targeting a reduction of about 15%. In Germany alone, this would affect 4,500 indirect jobs.
Audi, a subsidiary of struggling auto giant Volkswagen, confirmed that the board of management was in negotiations with workers’ representatives but did not comment on the number of jobs that could be affected.
Audi saw a sharp fall in profit in the third quarter, partly due to high costs associated with the likely closure of its plant in Brussels.
Reuters
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