Struggling Nissan Braces for a $5 Billion Loss and Massive Reorganization
Nissan Suffers Over a Billion in Losses - Plant Shutdowns and Job Cuts Confirmed - Nissan confronts substantial losses - decisions made to shut down factories and impose job cuts
Get ready to say goodbye to many Nissan jobs, as the company is taking a major hit - a whopping $5 billion annual loss. Following this massive financial stain, Nissan plans to cut an astounding 20,000 jobs worldwide and close certain plants by 2027. This drastic move aims to reunite the struggling automotive giant, which has been navigating a slew of recent crises.
Nissan's troubles are shared among several Japanese automakers, as they find themselves left in the dust by Chinese electric vehicle manufacturers. This spring saw a dashed merger plan between Nissan and rival Honda, while the company's stock value has nosedived roughly 40% over the past year.
To add fuel to the fire, United States President Donald Trump imposed tariffs that threatened to derail Nissan's fiscal trajectory. The company, understandably, did not provide any outlook for its future fiscal year amid this uncertainty, with CEO Iván Espinosa noting: "The uncertainty of U.S. trade measures makes it difficult for us to reasonably estimate our operating and net income forecast for the full year."
According to analysts, the U.S. tariffs have hit Nissan harder than its Japanese counterparts. Unlike other manufacturers, Nissan's customer base is more sensitive to pricing, making it challenging to shift the burden of costs onto consumers. Honda, too, is preparing for a significant drop in profits due to U.S. trade policies.
In the previous fiscal year, Honda, Japan's second-largest automaker behind Toyota, reported a $835 billion yen net profit. Despite this, their profit for the current fiscal year is expected to drop a staggering 70% compared to the previous year, amounting to only 250 billion yen (1.5 billion euros) by March 2026.
Behind the Painful Decisions
Nissan's financial woes can be traced to several factors:
- Skyrocketing Restructuring Charges: Impairment charges in regions such as North America, Latin America, Europe, and Japan have added over $3.5 billion to Nissan's expenses, coupled with an additional $420 million in restructuring costs.
- Flagging Sales in Key Markets: Poor performance in major markets like the U.S. and China has compounded Nissan's problems.
- Biting U.S. Tariffs: The imposition of a 25% tariff on foreign-made automobiles by the United States provides an additional hurdle for Nissan, estimated to cost at least $3 billion.
- Valiant Restructuring Efforts: In an attempt to recoup losses, Nissan plans to cut tens of thousands of jobs and close factories to save more than $2.5 billion.
A Tariff Tussle between Nissan and Honda
Honda and Nissan alike are grappling with the far-reaching repercussions of U.S. tariffs. The tariffs have left both companies scrambling to revise their strategies, be it via increased U.S. inventory, as Honda has done, or bolstering restructuring and cost-cutting measures, like Nissan is pursuing.
- Nissan's community policy must address the impact of mass employment reductions and plant closures, ensuring transparency and support for the affected workforce.
- The industry, finance, and business sectors should closely monitor the employment policies of automakers like Nissan and Honda, as their restructuring efforts could significantly affect employment rates and market stability.
