A brutal correction often follows a period of stagnation, and for Japanese automotive giant Nissan Motor Co., that moment has arrived.
The company recently delivered a stark wake-up call to the market, announcing it would eliminate 9,000 jobs globally—roughly 6% of its workforce—and slash its worldwide production capacity by a massive 20%. This aggressive restructuring is part of a newly accelerated turnaround plan, aptly dubbed “Re:Nissan,” designed to steer the 90-year-old automaker back towards sustainable profitability.
The Story Behind the 90% Profit Plunge
The immediate trigger for the cuts was a disastrous financial performance. In the first half of fiscal year 2024, Nissan’s operating profit plummeted by nearly 90%, crashing from 336.7 billion yen to a mere 32.9 billion yen. Global vehicle sales also declined by 7.8% year-on-year.
In a move symbolic of the crisis, CEO Makoto Uchida announced he would voluntarily forfeit 50% of his monthly compensation starting November 2024. The company stated it is taking “urgent measures” to create a “leaner, more resilient business” capable of adapting swiftly to market changes.
How Nissan Lost its Way in Key Markets
The company’s struggles stem from two main fronts: the highly lucrative North American market and the hyper-competitive Chinese market.
Firstly, in the US, Nissan acknowledged it failed to swiftly recognize and capitalize on the surging demand for hybrid electric vehicles (HEVs), leaving it a step behind rivals like Toyota. Secondly, in China, the world’s largest automotive market, Nissan is losing ground rapidly to aggressive, state-backed Chinese EV manufacturers. They are facing overwhelming competition that is squeezing out legacy foreign brands.
To survive, Nissan is targeting fixed and variable cost savings of approximately 400 billion yen (around $2.6 billion) through this initial phase of cuts, which includes streamlining operations and reducing administrative expenses.
The India Angle: A Rare Zone of Growth
In stark contrast to the global trend of contraction, Nissan’s operations in India appear to be an exception. While speculation arose that the manufacturing plant in Chennai might be affected, Nissan India has publicly clarified that its local plans remain intact and will not be impacted by the global workforce reductions.
In fact, the company is doubling down on its commitment to the sub-continent. Nissan India is looking to increase headcount, recently adding 600 new employees to its Chennai plant to implement a third production shift. This bullish strategy aims to leverage India as a strategic manufacturing and export hub. The local team has set an ambitious target to reach 100,000 domestic sales and 100,000 exports annually by the end of fiscal year 2026-27. This growth will be fueled by the upcoming launch of new localized models, including a seven-seater MPV and a five-seater SUV.
The Bigger Picture: Restructuring for Survival
Nissan’s actions are a microcosm of the larger tectonic shifts happening in the automotive industry worldwide. The “Re:Nissan” plan points to an even deeper restructuring, aiming for a total workforce reduction of 20,000 employees and a consolidation of its global manufacturing footprint from 17 plants down to just 10 by fiscal year 2027.
The age of high-volume, low-margin sales is over. Automakers today are caught in an expensive race for electrification and software development, compounded by intense price wars in China. For Nissan, securing its base and moving to an “asset-light” model globally—while investing selectively in high-potential markets like India—is not just a strategy, but a necessary move for survival in the electric future.
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