Automaker Struggles with Declining Sales in Key Markets, Including China and the US, as It Slashes Production and Revises Profit Forecast
Nissan Motor’s stock plummeted 6% in Tokyo trading on Friday, following the company’s announcement of a major restructuring plan that includes cutting 9,000 jobs and reducing its manufacturing capacity by 20%. The move is part of the Japanese automaker’s efforts to stem its declining sales in two critical markets: China and the United States.
The news comes just a day after Nissan slashed its full-year operating profit forecast by 70%, signaling the company’s struggles with competitiveness in the global automotive market. In its statement, Nissan revealed that the restructuring would help the company save 400 billion yen (approximately $2.61 billion) in the current fiscal year, which ends in March.
Struggling in Key Markets
Like many of its global competitors, Nissan is facing increasing competition in China, where domestic automakers such as BYD are rapidly gaining market share with affordable electric vehicles (EVs) and hybrid models equipped with advanced software. Nissan’s offerings have not kept pace with the growing demand for cutting-edge EVs and hybrid vehicles, particularly in a market where consumers are increasingly favoring homegrown brands.
Meanwhile, Nissan has also encountered challenges in the US market, where hybrid vehicles are in high demand. The automaker has struggled to adapt to this shift in consumer preference, as it currently lacks a competitive hybrid lineup. CEO Makoto Uchida admitted that the company did not foresee the rapid rise in hybrid demand in the US, and that the revamped versions of Nissan’s core models had not performed as well as expected in the market.
A History of Struggles and Restructuring
Nissan’s restructuring efforts come at a time when the company is still grappling with the aftermath of the 2018 ousting of former Chairman Carlos Ghosn and the scaling back of its long-standing partnership with Renault. Despite multiple attempts to revitalize the brand and improve performance, the company has struggled to fully recover and find its footing in a rapidly changing automotive landscape.
The recent announcement of job cuts and production reductions is the latest in a series of moves aimed at streamlining operations and cutting costs. However, analysts have raised concerns about the company’s strategy, particularly regarding its mid-term plan, which was unveiled earlier this year. The plan outlined ambitious goals, including the launch of 30 new models over the next three years, increasing global sales by 1 million vehicles, and delivering total shareholder returns exceeding 30%. However, with the company’s current struggles, some analysts question the feasibility of these targets.
What’s Next for Nissan?
As the company faces significant challenges in key markets, there are growing concerns about its ability to rebound. Seiji Sugiura, an analyst at Tokai Tokyo Intelligence Laboratory, pointed out that Nissan’s management had placed too much hope on the success of new EV models and traditional vehicles, without adequately addressing the growing demand for hybrids. “Their understanding of the situation is completely wrong,” Sugiura said.
With Nissan’s restructuring underway, the company is poised for a difficult road ahead. As it continues to confront sales declines and increasing competition, its ability to adapt to the changing automotive market will be critical in determining its future success. In the meantime, the Japanese government has remained silent on whether it will offer any support for the embattled automaker, further complicating Nissan’s prospects.
As Nissan works to navigate this turbulent period, it faces tough decisions about how to position itself in an increasingly electrified and hybrid-driven world. Whether the company can successfully execute its restructuring plan and regain its competitive edge remains to be seen.
