With Nissan Motor Co.’s financial health deteriorating, the Japanese automaker is cutting jobs and slowing assembly lines.
The scent of opportunity has activist investors and potential buyers circling — fueling industry chatter about Nissan’s prospects as an independent automaker.
That drumbeat of speculation has gotten loud enough that Nissan Americas’ head honcho dispatched a Thanksgiving weekend memo intended to calm U.S. retailers’ frayed nerves.
“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,” Nissan Americas Chairperson Jeremie Papin said in the Nov. 30 message viewed by Automotive News. ”We are working hard to deliver more details on these action plans. In the meantime, we ask for your patience and understanding.”
In the short- and midterm, Papin said Nissan will focus on three areas: reinforcing the product lineup, stabilizing and rightsizing the business, and driving growth.
“We recognize the actions designed to increase product competitiveness, the core of our business, are highly important to bring Nissan back on the growth track,” he wrote.
A Nissan spokesperson confirmed the authenticity of the memo but declined to comment.
Questions about Nissan’s long-term outlook
A retailer said there is significant concern among the network about Nissan’s long-term business outlook.
Papin’s comments “took away some of the heartburn, but we need details on the path to a sustainable future,” said the dealer, who asked not to be identified.
Another dealer was unimpressed, saying the memo “did nothing to address the speculation and apparent financial difficulties Nissan is facing.” About two years since the height of the vehicle shortages brought on by the pandemic, Nissan has had to significantly reduce production capacity and business operations because of poor sales performance.
”This shows to me a complete lack of vision and understanding of the marketplace at a time when they were highly profitable and selling every vehicle they were building,” the second retailer said.
According to the Automotive News Research & Data Center, more than a quarter of the Nissan division’s U.S. market share has evaporated over the past five years, tumbling to 5.6 percent in the first nine months of 2024. The brand’s 1,070 U.S. dealerships have felt the fallout from the meltdown, with their average profitability nosediving in the first half of 2024 to the lowest level in nearly 15 years.
On Nov. 7, Nissan Motor Co. lowered its outlook for full-year operating income by 70 percent while revealing plans to slash about $2.6 billion in expenses and cut 9,000 jobs globally.
Automotive News reported Nov. 25 that Nissan cut about 500 jobs — or 6 percent of its roughly 8,000 salaried workforce in the U.S. — through buyouts this year.
Meanwhile, hourly workers at Nissan’s two vehicle assembly plants in the Southeast worry about the potential for more cuts.
The automaker forecasts that its U.S. output will drop 17 percent — or more than 100,000 vehicles — in the fiscal year ending March 31. Nissan will reduce some assembly plant shifts from five days a week to four through the end of the calendar year, according to a November supplier communication obtained by Automotive News.
“These actions put us on a path to secure sustainable profit and cash generation, with an eye to future growth,” Papin said, referring to the global restructuring.
Chasing opportunities with upcoming hybrids
Papin said Nissan is taking actions to support “existing models in a very competitive marketplace, while also investing in the portfolio to maximize market opportunities and value for our business partners.”
Caught flat-footed as demand for hybrids surged in the U.S., Nissan now is scrambling to meet the market opportunity. In the next three years, the automaker expects to bring three electrified variants of its bestselling Rogue crossover to U.S. stores, starting with a plug-in hybrid model in late 2025. That will be followed by a Rogue using Nissan’s in-house e-Power series-hybrid technology and then an extended-range version that would pair the hybrid system with a roughly 30 kilowatt-hour battery.
Papin concluded the memo by reassuring dealers that Nissan has “strong levels of liquidity.”
The executive said Nissan’s $9 billion (¥1.36 trillion) in net cash at the end of September “allows us to continue prioritizing future investments in research and development to drive product competitiveness, while we address cost structures within the company.”
Source: Automotive News, December 3, 2024