Hiroto Saikawa, president and chief executive officer of Nissan Motor Co., speaks during a news conference at the company's headquarters in Yokohama, Japan, on Thursday, July 25, 2019. Picture: AFP/AKIO KON
Hiroto Saikawa, president and chief executive officer of Nissan Motor Co., speaks during a news conference at the company's headquarters in Yokohama, Japan, on Thursday, July 25, 2019. Picture: AFP/AKIO KON

Yokohama — Nissan Motor has unveiled its biggest restructuring plan in a decade, axing nearly a 10th of its workforce and flagging possible plant closures to rein in costs that ballooned when Carlos Ghosn was CEO.

The cuts announced on Thursday followed a decimation of Nissan’s quarterly profit, highlighting how a crisis — brought about by sluggish sales and rising costs — is deepening at Japan’s No 2 carmaker in the wake of a financial misconduct scandal over Ghosn, who has denied the charges.

Nissan will reduce at least 12,500 positions globally by March 2023 — its deepest job cuts since 2009 — and slash production capacity, mainly of compact cars at underutilised plants abroad. The move will shrink its product lineup by about 10%, CEO Hiroto Saikawa said.

The maker of the Rogue SUV crossover and the tiny, low-cost Datsun Redi-Go, had 138,000 employees as of March 2018.

“We are mainly targeting sites where we made investments to produce compact cars under the Power 88 plan,” Saikawa told reporters at a briefing at Nissan headquarters, referring to an aggressive growth strategy spearheaded by Ghosn in 2011 to grab 8% global market share and an 8% operating margin.

Saikawa said a total of 14 facilities would be affected.

Years of heavy discounting and fleet sales, particularly in the US, have left Nissan with a cheapened brand image and low vehicle resale values, and also hit profits.

Nissan’s first-quarter operating profit plunged 98.5% to ¥1.6bn ($14.80m), its worst performance since a loss in the March 2008 quarter.

“Profitability is very poor at the moment,” Saikawa said, but added that the company was pushing to achieve its revenue target of ¥14.5-trillion and operating margin of 6% through the end of financial 2022.

The carmaker said global vehicle production will fall 10% through the year to March 2023 while global sales until then will increase modestly to 6-million units annually from the current 5.5-million.

Global showdown

The dismal quarter will pile pressure on Saikawa, who has been tasked with shoring up performance. His job is made more difficult by the fact that the vehicle industry is struggling worldwide.

China’s slowing economy, further depressed by a trade war with the US, has hit demand, even as American consumer confidence has faltered. Tougher emission regulation has taken a toll on diesel-car sales in Europe, and an increase in electric vehicle sales and ride-sharing has worsened a drop in sales at the world’s biggest carmakers.

Ford, the second-largest US vehicle maker, is cutting 12,000 jobs and closing plants, while Daimler, Aston Martin and supplier Continental warned on profits this week.

Nissan’s job cuts expand on redundancies initially announced in May, which affected eight facilities including in Spain — where trucks and vans are made — and Indonesia, where the March and Datsun models are manufactured.

About half the announced job cuts so far have cost the company about ¥40bn and further layoffs could cost about the same, CFO Hiroshi Karube said.

The company maintained its profit forecast of ¥230bn for the year ending March 2020, a 28% drop from 2018 and its weakest in more than a decade.

Reuters