Desperate times call for desperate measures, and slumping sales and profits are forcing Nissan down a path of downsizing to survive. Reuters reports that the carmaker’s restructuring plan, due out next month, would likely mean slashing one million vehicles from its annual sales target, according to senior company sources.
Nissan has already had to rethink its aggressive expansion strategy pursued by now-ousted boss Carlos Ghosn, having burned through cash even before the coronavirus pandemic – a crisis that is piling even more pressure to cut back.
No new sales target has been proposed (and it’s unclear if Nissan will officially announce one), but its restructuring plan through to March 2023 should be based on the assumption that it will only return to selling five million vehicles a year by then, said two sources.
This is lower than the six million vehicles outlined by then-CEO Hiroto Saikawa last July, already a significant drop on the eight million targeted under Ghosn. The publication says that Nissan likely sold five million vehicles during the past financial year, but the pandemic has dampened this year’s outlook.
“For years, Nissan was looking for annual sales volumes around seven to eight million vehicles. The company has never managed to sell much more than five million or so,” said one source. “The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020 to 2022.”
A third senior source said the figure could be even lower than five million given the pandemic’s impact, with demand for cars falling throughout the world. Details on the plan have yet to be finalised, and the company declined to comment on its progress, with a spokeswoman only saying “the details will be shared in May.”
July’s forecast also included cutting annual global production capacity to around 6.5 million vehicles, and cutting another million vehicles out of the sales target would equate to closing three or four more assembly plants and culling thousands more jobs on top of its existing plans to cut workforce by 10%. The cutbacks will also have a ripple effect on its suppliers and dealers, says Reuters.
The sources said that a key metric of the recovery plan will be its operating profit margin, and one of them added that new CEO Makoto Uchida is likely to keep Saikawa’s target margin of around six percent. The figure was just 0.9% in the third quarter of last year, way down on the circa-eight percent of leaders Toyota and Volkswagen before the pandemic hit. “At the very least, a downsizing is a given,” said that source.
Cash preservation will also be key. Nissan’s automotive operations had a negative free cash flow of 670.9 billion yen (RM26.9 billion), more than six times what it was a year ago. “That’s no longer at an acceptable level,” said one of the sources.
The company requested a $4.6 billion (RM19.9 billion) commitment line from major lenders to soften the blow of the pandemic while it worked on the urgent turnaround, people with knowledge on the matter said.
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I would look into the ASEAN region to increase global sales. Bringing in new models and tighten collaboration between the countries.
You mean like how they did this?
(https://paultan.org/2020/03/20/nissan-pulls-the-plug-on-car-production-in-indonesia/)
Datsun for the ASEAN region.
I wonder which will come first for Nissan, this car or bankruptcy? Nissan better just tutup kedai.
When they decided to chop the golden goose, they deserve to in this puddle of s***. Ghosn single handedly saved this brand from going under, yet he is treated as a criminal. Japanese will never trust another race to lead their companies, and hence its always beating in circles.
The reason why Nissan is facing uncertainties and no turnaround is all due to market has seen how you treated your saviour! And Ghosn was spot on with his predictions Nissan will go under in 2-3 years. With such crisisess happening, it may be sooner than he predicted!
Once again this is brought upon yourselves by your japanese greed and ego. This is the start to the breakup of Renault-Nissan-Mitsubishi alliance and soon the end of Nissan themselves.
Nissan is so ungrateful. When they were down, when they were practically bankrupt, they went to Renault begging on their knees for help.
And Renault was so generous to send in their best A Team and their best CEO and tons of money to save them. And save them they did, all thanks to Ghosn whose achievements are like Messiah. And what the japanese did, they backstabbed him and paraded him around to be shame just like Messiah. They were about to sacrifice him just like Messiah but he was smart to run in the end. Japan didn’t syukur for him coming to save them but instead wanted to end him. And there are many examples like these japanese that never syukur for being saved.
These japanese and others like them don’t deserve leaders such as Ghosn & Najib & Mesiah that only appears once in 2000 years, willing to put everything they had into saving their company/country/souls, but see what those got saved do to them? Jailed, spat at, publicly humiliated, willing to sacrifice them w/o thinking what they had done to save them.
The world and its people and history doesn’t deserve such luminaries.
Good to see. So I hope that Toyota, Proton & Nissan will stop selling cars soon to close shop. This is great opportunity to buy Honda & P2
Statistically, P2 cars killed more people yearly than COVID-19 did so far. So should we keep far away from P2?
You saying P2 cars murder the occupants? Perodua makes killer cyborg machines? Don’t be daft. Go back to school and try learning for a change.