Earlier this month, Japanese carmaker Nissan announced massive job cuts under a comprehensive restructuring plan that the company has for declining sales in key markets, particularly China and the United States. The plan intends to reduce about 9,000 jobs globally and cut back on 20% of production worldwide.
These are cost-cutting moves the company is adopting since the company faces a challenging environment, heightened competition in China as several local electric vehicle makers compete for the market share, including BYD, and slowdown in the U.S. caused by inflation and tight monetary policy affecting new car sales.
In China, Nissan’s sales dropped an alarming 24% just recently, largely because Chinese automakers are gaining significant ground quickly in EV development. The market share in China for Nissan has significantly been threatened as Chinese firms are leading globally in the EV sector, which puts it and other foreign automakers in a tight spot.
It faces economic headwinds including inflation and high borrowing costs that have depressed demand for new vehicles in the United States. The company wants to cut its salaried workforce by offering severance packages, hoping not to incur layoff costs at least immediately.
Financially, Nissan is under much pressure. It revised its profit forecast for the fiscal year that ends March 2025 because it expects a 70% decline in operating profit. These financial issues resulted in major drops in the stock prices of Nissan as well.
Overcoming these same, Nissan’s CEO Makoto Uchida declared measures with an aim to get “leaner and more resilient.” Nissan has plans to cut down on executive salaries; the salary of Makoto Uchida himself had been halved
Despite all these hurdles, Nissan remains bullish on the EV market with its three new models being introduced in its Sunderland plant in the U.K. in the same location, the company will introduce the next generation Qashqai and Juke models along with updated Leaf models.
It has invested in collaborations like Honda, working to build EVs and software to gain competitive advantage. This partnership and continued commitment to EV production are but a part of Nissan’s strategic pivot as it continues to adapt to the global shift toward electrification.
