Nissan Motor Announces $2.6 Billion Cost Saving Plan

By Daniel Leussink

TOKYO (Reuters) – Nissan Motor announced a $2.6 billion cost-saving plan on Thursday, which includes 9,000 job cuts and a 20% reduction in global production capacity as it combats declining sales in China and the United States.

Japan's third-largest automaker also revised its annual operating profit forecast downward by 70% to 150 billion yen ($975 million), marking its second downward revision this year. Nissan scrapped its net profit forecast due to ongoing restructuring efforts aimed at cutting costs by 400 billion yen ($2.6 billion) this fiscal year.

Nissan is among many foreign automakers facing challenges in China, impacted by increasing competition from agile local manufacturers in the expanding electric vehicle sector.

Additionally, the Yokohama-based automaker is experiencing slumping sales in the U.S., with no immediate signs of recovery. CEO Makoto Uchida admitted that the company lacks the necessary hybrid and plug-in hybrid models for the U.S. market.

> "We didn't foresee HEVs ramping up this rapidly (in the U.S.)," Uchida told reporters.
> "We started to understand this trend towards the end of the last fiscal year, but the model year switching for our core models didn't go as smoothly."

To address falling sales, Nissan plans to:
– Reduce production capacity by 20%
– Shorten vehicle development lead time to 30 months
– Strengthen collaboration with partners including Renault and Mitsubishi Motors.

Nissan is also selling up to 10% of its stake in Mitsubishi Motors, aiming to raise up to 68.6 billion yen.

Chief Monozukuri Officer Hideyuki Sakamoto stated, "Globally, we currently have 25 vehicle production lines. Our plan is to reduce the operational maximum capacity of these lines by 20%" and enhance efficiency by adjusting line speed and shift patterns.

Out of 133,580 employees, Nissan plans to cut 9,000 jobs, representing 6.7% of its workforce.

Operating profit for the July-September second quarter plummeted 85% to 31.9 billion yen, significantly lower than the LSEG consensus estimate of 66.8 billion yen.

Nissan's global sales decreased 3.8% to 1.59 million vehicles in the first half of the financial year, primarily due to a 14.3% drop in China. U.S. sales also declined nearly 3% to around 449,000 vehicles. Together, these two markets account for nearly half of Nissan's global sales volume.

In related news, Honda Motor reported a surprising 15% drop in second-quarter operating profit due to significant sales declines in China, causing shares of Japan's second-largest automaker to drop by 5%.

($1 = 153.8500 yen)