Nissan yesterday warned that first-quarter profit tumbled around 90 percent, a day before it is expected to announce more than 12 500 job cuts as the crisis deepens at Japan’s second-largest carmaker. The dismal earnings, due to be formally announced today, mark one of Nissan's worst quarterly performances in a decade.
Nissan is fighting to rein-in its operations after years of aggressive expansion under former chairperson Carlos Ghosn, ousted last year in a dramatic scandal that shook the industry.
The planned job cuts over the next few years include the 4800 detailed in May and will mostly be at factories overseas with low utilisation rates, a person with direct knowledge of the matter said. Nissan declined to comment on the job cuts. It said a Nikkei business daily report that it suffered roughly a 90percent year-on-year drop in first-quarter operating profit was “broadly accurate”.
Nissan is struggling to improve weak profit margins in the US, a key market where Ghosn for years pushed to aggressively grow market share during his time as chief executive.
Years of heavy discounting to grow sales in the world's second-biggest car market have left Nissan with falling demand for the Altima sedan and other models, a cheapened brand image, low resale values, and a nearly battered bottom line.
“Deteriorating performance in the US is a big issue that we’re facing,” Motoo Nagai, chairperson of the carmaker’s newly formed audit committee, said yesterday. “For a long time we were concerned with increasing volume (sold in the market). We were chasing numbers. Now it’s time to enhance the brand,” he said.
The job cuts would exceed 7 percent of Nissan's 138000-strong workforce and are part of a broad “turnaround” strategy to be rolled out later this year, said another source, a top executive.
In April the group announced a R3 billion investment for the manufacturing of a new Nissan Navara at its plant in Rosslyn, north of Pretoria.
The production, the ramp up for which had already begun, would result in the creation of 1200 full-time jobs with the cars designed for local and export markets.
The plan would be “aimed at unwinding Ghosn’s negative legacies”, which has led to excess, Nagai added.
Regions with significantly under-utilised manufacturing capacity which could be affected include India and Brazil, another source said.
The latest job cuts highlight the extent of problems facing chief executive Hiroto Saikawa, who is also grappling with fractured relations with French alliance partner Renault following the arrest of Ghosn, their shared former chairperson.
Ghosn has been charged with financial misconduct in Japan and denies wrongdoing.
Saikawa kept his job in a vote at an annual shareholders meeting last month, fighting off a rare rebuke by top proxy advisory firms who urged shareholders not to reappoint him considering he was groomed for leadership by Ghosn.
But an extended tenure for Saikawa at Nissan may be unlikely, as the carmaker has tasked a newly formed nominations committee with finding his successor.