Nissan introduces new cost cuts: To close 7 plants & axe jobs

Nissan’s new CEO, Ivan Espinosa, is aiming for total cost savings of some 500 billion yen.

Nissan has introduced sweeping new cost cuts, saying it will close 7 manufacturing plants and eliminate 11,000 more jobs. The brand is struggling to turn itself around.

Nissan, which held off on releasing estimates for the financial year just starting, saw its profit almost wiped out in the one just ended. Operating profit totalled 69.8 billion yen ($472 million) in the 12 months to March, a decline of 88% from the previous year.

Things have not been going great for the carmaker in recent times. It has taken a big hit with weakening sales in the U.S. and China. Additionally, the merger talks with Honda collapsed, and the chief executive was recently replaced as well. Just like other car companies, U.S. tariffs have also had an effect, along with competition from Chinese EV makers in Southeast Asia and elsewhere.

Nissan’s new CEO, Ivan Espinosa, is aiming for total cost savings of some 500 billion yen. But it's going to be a tough task turning around a brand that has seen its once-mighty brand value eroded.

"Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support," Espinosa told a press conference.

Nissan will cut the number of its production plants to 10 from 17 and reduce the complexity of parts by 70%. There are no details on which plants are expected to close. The new job cuts will slash Nissan's total workforce reduction to around 20,000 jobs, after it previously announced plans to cut 9,000 positions.

Nissan is also said to be paying the price for years under former Chairman Carlos Ghosn, where it focused too heavily on sales volume, and used heavy discounts to keep car sales moving.

A sudden turnaround in Nissan’s fortunes is not expected. The automaker sees a 200 billion yen operating loss in the first quarter, CFO Jeremie Papin said.

Source: Reuters