Nissan In Dire Straits But Could Honda Save The Day?

Unless Nissan pulls a last-minute financially viable magic rabbit out of the hat, then the company is headed for bankruptcy within 12 to 14 months according to one senior Nissan official. Now in the worst situation since Carlos Ghosn arrived in 1999 to save the near-bankrupt company, Nissan has just announced that it would cut 9,000 jobs worldwide, cut production capacity by 25% and totally overhaul its product lineup.

Unable to reinvent itself after disgraced former CEO Carlos Ghosn was arrested for breach of trust and misusing company assets back in November 2018, Nissan recently announced that its profits this year will be 70% lower than expected and suffered a $60 million loss last quarter.

Slashing jobs and cutting production aims to save $3 billion

In addition to slashing jobs, cutting production and delaying the launch of new models to save $3 billion, they’ve had to sell off a large stake in Mitsubishi Motors going from a 34% holding to less than 25%. Nissan has also distanced itself from partner Renault, and the CEO Makoto Uchida is taking an unprecedented voluntary 50% pay cut.

Nissan’s head of manufacturing, Hideyuki Sakamoto said at a press conference earlier in November that, “Globally, we currently have 25 vehicle production lines. Our current plan is to reduce the operational maximum capacity of these 25 lines by 20 percent. One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel.”

Cheap Chinese EV alternatives hacking away at Nissan’s share

So why is Nissan experiences such hardships? It all basically comes down to the firm’s products and its stalled future plans to electrify. Apart from the fact that the brand’s current product lineup is not striking a nerve in the marketplace, with just two electric models on sale in international markets, the root of the problems stem from a wave of cheaper EV alternatives coming from China that are flooding the global market and stealing market share away from the Japanese company. In addition, its core electrification technology, the e-Power hybrid powertrain, which was a hit in Japan, has not yet gone on sale in the U.S.

But it’s not all doom and gloom. In the U.S., the locally-built Rogue enjoys a top ten seller title having already sold over 189,000 units up to September 2024. Meanwhile in Europe, as of the end of October, the Nissan Qashqai and Nissan Juke compact SUVs retain their popularity in Europe sitting in third and fourth respectively, with the Qashqai a consistent top-three runner having been the UK’s most popular vehicle in 2022. Nissan can build big sellers, they’ve proven this fact. It seems as though they just need to get to a stage where they can create a bunch of new models that offer the same levels of inspired design and product execution as the Qashqai and Rogue.

According to the Financial Times, Nissan is searching for an anchor investor to help it survive a make or break year. We are also hearing that Nissan is asking Honda to buy up some of its shares having recently signed a partnership for electric vehicle development.

The strategy rethink comes just eight months after Uchida attempted to kick-start growth with a new business plan called The Arc which aimed to raise global sales by 1 million vehicles to around 4.4 million. Instead, Nissan just cut its global sales outlook for the current fiscal year and seems satisfied with sales of 3.5 million.

Sanshiro Fukao, a senior fellow at Itochu Research Institute wrote, “If I were an employee of Nissan today, I would be too embarrassed to tell my children and parents about my company. I feel sorry for everyone involved with Nissan.” Harsh words but not unfounded. Can Nissan make the necessary turnaround and survive? Watch this space.

MORE FROM FORBES

ForbesNew Toyota Century Brand Sits Above Lexus But Sold Through Lexus DealersBy Peter LyonForbesLexus IS Sedan To Return As An EV But With Pleasant SurpriseBy Peter Lyon