Nissan (7201.T) is planning aggressive cost cuts to deal with an unexpected slump in sales as the expansionist strategy it inherited from fugitive former Chairman Carlos Ghosn flounders, four people familiar with the plans said.
Japan’s second biggest carmaker is set to eliminate at least 4,300 white-collar jobs and shut two manufacturing sites as part of broader plans to add at least 480 billion yen ($4.4 billion) to its bottom line by 2023, two of the people told Reuters.
The moves come on top of a turnaround plan unveiled in July and are likely to include cutting Nissan’s range of cars and the array of product options and trims in each line, slashing jobs mostly at head offices in the United States and Europe, and reducing advertising and marketing budgets, they said.
“The situation is dire. It’s do or die,” a person close to Nissan’s senior management and the company’s board told Reuters.
Most of the planned cuts and measures to enhance efficiency were presented to Nissan’s board in November and received its general blessing, two sources said.
A Nissan Motor Co (7201.T) spokeswoman declined to comment on new restructuring measures or the view that weaker-than-expected sales were the catalyst for a global overhaul.
Under Ghosn, Nissan embarked on a global expansion, boosting capacity to add new models, driving more decidedly into markets such as India, Russia, South Africa and southeast Asia and spending heavily on promotions and marketing to hit targets.
Now, many of those models are missing sales goals and executives at Nissan’s Yokohama headquarters estimate up to 40% of its global manufacturing capacity is unused, or under-used.
Some executives are worried Nissan, part of an alliance with Renault (RENA.PA) and Mitsubishi (7211.T), could post another loss at its carmaking business in the last quarter of 2019 – and possibly for all its operations in the year ending in March.
One source said that would most likely hinge on whether Nissan books big restructuring expenses in its current financial year, or waits until the year ending in March 2021.
Reuters spoke to nine people familiar with Nissan’s plans. All declined to be named due to the sensitivity of the subject.