Japanese automaker Nissan has announced a loss for the latest fiscal quarter. Declining vehicle sales, rising costs and inventories have created a major challenge for the company. In this scenario, the company has announced layoffs of around 9,000 employees, which is about 6% of its total workforce of 1,33,000. Along with this, the company has decided to reduce the global production capacity by 20%.
Nissan CEO Makoto Uchida has decided to take a 50% pay cut in recognition of the company’s financial performance. He has promised to come up with a new plan to recover from Nissan’s deteriorating financial position.
Uchida declined to elaborate on which countries would be affected by the staff cuts. Nissan posted a loss of 9.3 billion yen ($60 million) in the quarter ended September, compared with a profit of 190.7 billion yen in the same quarter last year. Nissan’s quarterly sales fell to 2.9 trillion yen ($19 billion) from 3.1 trillion yen.
Uchida admits that Nissan has not been able to respond to global market changes, rising raw material prices and changing consumer preferences. “I take this situation very seriously,” Uchida told reporters. He added, “Nissan’s business structure will be restructured to make it more capable and strong.”
Sales of Nissan vehicles have fallen in key markets such as the US, which are dominated by companies such as Ford, Toyota and Tesla. Uchida said that all the company’s divisions and upcoming plans will be reviewed.
Headquartered in Nissan’s Yokohama port, the company reported sales of 5.98 trillion yen ($39 billion) in the first six months, from April to September, down 1% from the same period last year. The company’s profit for the six months was 19.2 billion yen ($124 million), down sharply from 296.2 billion yen last year.
Nissan cut its sales revenue forecast for the fiscal year through March 2025 to 12.7 trillion yen ($82 billion), from 14 trillion yen ($91 billion) previously. Due to the changing situation, it has become difficult for the company to give a profit forecast for this financial year. The company had previously forecast a profit of 300 billion yen ($1.9 billion).
Nissan now expects to sell 3.4 million vehicles worldwide in the fiscal year ending March 2025, up from an earlier estimate of 3.65 million vehicles. This year’s forecast decline is almost the same as last year’s sales.
The company has decided to appoint a new Chief Performance Officer, who will take charge next month, to improve its operations. The company has decided not to pay dividend due to difficult financial situation.