Nissan’s American division has urged its network of 1,070 dealers to remain patient as the Japanese automaker navigates a challenging financial period. In a memo distributed on November 30, Nissan Americas Chairperson Jeremie Papin acknowledged the company’s difficulties but reaffirmed its commitment to securing long-term stability and growth.
The communication follows Nissan’s recent announcement to cut global production capacity by 20% and lay off 9,000 employees as part of a sweeping plan to “stabilize and right-size” the business.
A Troubling Financial Report
Nissan’s latest financial results highlight the gravity of its situation. The company’s operating profit for the first half of the Japanese fiscal year 2024 plunged by 303.8 billion yen (~A$3 billion) to just 32.9 billion yen (~A$334 million). This dramatic decline underscores the challenges faced by one of the world’s largest car manufacturers.
Papin’s memo expressed the company’s commitment to turning its fortunes around. “We are working diligently to implement turnaround actions, and the stability and future value they will bring to valued business partners like you is a high priority for us,” he wrote.
Mounting Pressures on a Global Scale
Nissan’s woes are rooted in a series of organizational and market challenges. The arrest of former CEO Carlos Ghosn in 2018 for alleged embezzlement set off a cascade of internal and external pressures. Compounding the issue, sales in the US and China – two of Nissan’s largest markets – have declined sharply.
Further complicating matters is Renault’s decision to reduce its stake in the company. As a key partner in Nissan’s global alliance, Renault’s retreat has left a financial and strategic void that Nissan must now fill.
Nissan’s share value has also plummeted by 36% over the past 12 months, hitting its lowest point since the global COVID-19 pandemic disrupted industries worldwide.
Survival Tactics and Executive Sacrifices
In a bid to weather the storm, Nissan has taken drastic measures. These include scaling back manufacturing, reducing workforce numbers, and cutting executive compensation. CEO Makoto Uchida has committed to forfeiting 50% of his monthly pay, with other executive committee members also taking pay cuts.
“These actions put us on a path to secure sustainable profit and cash generation, with an eye to future growth,” Papin stated, adding that the company is actively working to enhance its product competitiveness and return to a growth trajectory.
Dealer Patience Tested
The memo also emphasized the importance of dealer patience and understanding during this tumultuous time. Papin acknowledged the critical role of dealers in Nissan’s recovery and assured them of the company’s “strong levels of liquidity” to weather the crisis.
“We are working hard to deliver more details on these action plans,” he wrote. “In the meantime, we ask for your patience and understanding.”
Crisis Looms as Nissan Fights for Survival
According to a recent report by The Financial Times, a senior Nissan official warned that the company has “12 or 14 months to survive.” Despite the dire outlook, Nissan is moving forward with its turnaround efforts, including seeking new investors to bolster its financial stability.
As Nissan braces for a difficult road ahead, its leadership remains focused on securing a future that balances profitability and growth. For now, the automaker’s US dealers and stakeholders must rally around the company as it strives to overcome one of the most challenging periods in its history.
