Nissan's Bold Survival Strategy: 20,000 Job Cuts and Radical Restructuring Amid Financial Crisis

Nissan Motor has unveiled a comprehensive business restructuring plan on May 13th, targeting cost reductions of 500 billion yen in fixed and variable expenses from its 2024 fiscal year baseline. The company aims to achieve positive operating profit and free cash flow in its automotive business by fiscal year 2026.

To accomplish this, Nissan will implement a series of cost-cutting measures, including significant workforce reductions and powertrain plant redeployment.

Expanding Layoffs to 20,000 Employees, Planning Multiple Factory Closures

According to Nissan's plan, the company will cut a total of 20,000 jobs between fiscal years 2024 and 2027, including the previously announced 9,000 positions. These layoffs will affect direct, indirect, and contract employees across global production, general management, and R&D departments.

Simultaneously, Nissan plans to consolidate its automobile production plants from 17 to 10 by fiscal year 2027 and streamline powertrain facilities to redeploy and adjust production shifts, thereby reducing capital expenditure. The suspension of construction of a new LFP (lithium iron phosphate) battery factory in Kitakyushu is part of this plan.

source: Nissan

In fact, the Kitakyushu battery factory was only officially announced in January this year, with a planned annual production capacity of 5GWh and an expected investment of 153.3 billion yen. The batteries were scheduled to be installed in light electric vehicles as early as 2028. However, the project was halted just over three months later, signaling the financial distress facing Japan's third-largest automaker.

According to the financial report released the same day, for fiscal year 2024 (April 2024 to March 2025), Nissan's global sales remained at 3.346 million vehicles, with consolidated net sales of 12.6 trillion yen and operating profit of 69.8 billion yen. The operating profit margin was merely 0.6%, with a net loss of 670.9 billion yen, compared to a profit of 426.6 billion yen in fiscal year 2023.

Beyond the shift from profit to loss, Nissan's debt burden is set to increase dramatically. According to data compiled by Bloomberg, Nissan and its affiliated companies face 1.6 billion USD in debt maturities this year, rising to 5.6 billion USD by 2026—the highest level since 1996.

Redefining Market and Product Strategies

While layoffs and plant closures represent the most direct cost-saving measures, these alone are insufficient to achieve profit growth. Nissan will also adjust its market strategy and implement extreme frugality in product development.

In terms of market strategy, Nissan has designated the United States, Japan, China, Europe, the Middle East, and Mexico as its primary markets. In the US, Nissan will primarily focus on rapidly growing segments such as hybrid vehicles and revitalize the Infiniti brand through synergies with the Nissan brand. In Japan, the company will expand its model coverage. In China, Nissan will launch multiple new energy vehicles (NEVs) and meet diverse global demands through exports from China. In Europe, the focus will be on SUVs in the B/C segments.

Notably, during the opening day of the Shanghai Auto Show last month, Nissan's China regional head, Ma Zhixin, announced that Nissan would invest an additional 10 billion yuan in China by the end of 2026, specifically for electric vehicle R&D and innovation, to continue competing in the Chinese market. According to the plan, by summer 2027, Nissan will introduce 10 new energy vehicles to the Chinese market, increasing Nissan-branded models from 5 to 9, with more models to follow.

Regarding product development, Nissan will temporarily halt preliminary development and product development for fiscal year 2026 and beyond. For specific product development, Nissan plans to reduce component quantities by 70% and significantly shorten development time for mainstream models to 37 months and for successor models to 30 months, including the new Nissan Skyline, new Nissan Global C SUV, and new Infiniti compact SUV. Additionally, Nissan plans to reduce its platform count from the current 13 to 7 by fiscal year 2035.

Failed Honda Merger Intensifies Survival Crisis

Due to its concerning financial situation, Nissan Motor and Honda Motor announced the formal initiation of a merger on December 23 last year, which would have created the world's third-largest automotive enterprise. However, this merger plan collapsed just weeks later due to hierarchical relationship issues, completely falling apart by February this year, further exacerbating Nissan's survival crisis.

Nevertheless, in this restructuring plan, Nissan mentioned that it would continue collaborating with Honda within the framework of strategic partnerships in automotive intelligence and electrification. This leaves room for potential future cooperation between the two companies.

Nissan has clearly stated that while the restructuring goals are ambitious, the strategies and commitments to achieve these objectives are clear. The company will steadily implement this plan to restore its operational performance. Whether this restructuring plan can rescue Nissan from its dire situation remains to be seen.