Nissan Reveals Recovery Plan After Major Financial Loss
Financial Performance and Loss Drivers
Nissan Motor Co. reported a net loss of ¥671 billion (€4 billion) for the fiscal year ended March 2024, a sharp reversal from the prior year’s €2.6 billion profit. The shortfall was driven by slipping vehicle sales in China, supply-chain disruptions and the cost of an ambitious restructuring programme.
Declining demand in key markets coincided with elevated raw‐material prices and lingering semiconductor constraints. Foreign‐exchange volatility, particularly the weakening of the Japanese yen, also inflated the local‐currency cost base for imported components.
Plant Consolidation and Workforce Reduction
As part of its recovery blueprint, Nissan will reduce its global production footprint from 17 plants to 10 by March 2028. While specific sites remain unconfirmed, closures will include some facilities in Japan and select overseas plants. The automaker expects to cut headcount by a further 9,000 positions on top of reductions announced last year, targeting an overall workforce decline of roughly 15%.
Cost Reduction Targets
The company has set a target to slash ¥500 billion ($3.4 billion) from its cost base. Key initiatives include:
- Procurement optimisation through strategic supplier consolidation and global sourcing of semiconductors and raw materials.
- Lean manufacturing upgrades at remaining plants, including automated assembly lines and digital quality inspections.
- SG&A efficiency by centralising back-office functions and cutting non-critical R&D outlays.
Partnerships and Geographical Strategy
New CEO Ivan Espinosa emphasised leveraging alliances to share technology and balance regional risks. Nissan will deepen cooperation with Renault SA in Europe on EV platforms and with Dongfeng Nissan in China for localized models. The automaker is also assessing joint ventures in North America to align production with U.S. market incentives under the Inflation Reduction Act.
Cost Reduction Strategy Deep Dive
Analysing Nissan’s cost plan reveals three pillars:
- Manufacturing Automation: Installing robotics and predictive maintenance systems to cut downtime by 20%.
- Digital Procurement: Employing AI algorithms for demand forecasting, driving a 5% reduction in inventory holding costs.
- Shared Services: Merging IT and finance centres across regions to save ¥50 billion annually on overhead.
Market Realignment: Focus on Key Regions
Nissan’s revised market strategy will prioritise three regions:
- China: Accelerate rollout of low-cost EVs under the A-Segment platform, tapping government subsidies.
- North America: Expand crossover and truck offerings manufactured at streamlined U.S. plants to capitalise on IRA tax credits.
- Europe: Co-develop electric hatchbacks with Renault to meet stringent CO₂ targets and consumer demand for compact models.
Technology and Innovation Roadmap
To support long-term growth, Nissan will invest in next-generation battery chemistry and software platforms. Key initiatives include:
- Scaling up solid-state battery trials to double energy density by 2028.
- Integrating over-the-air software updates to enable new driver-assistance features.
- Expanding the e-POWER hybrid system to three new models, promoting fuel efficiency gains of up to 30%.
Expert Opinion
Industry analysts note that Nissan’s leaner structure and partnership realignments could accelerate its return to profitability, but execution risk remains high amid global market uncertainties.
Outlook and Next Steps
CFO Jeremie Papin declined to issue a profit forecast for FY2026, citing ongoing market volatility. Management has nonetheless set a target to reach break-even by that year through disciplined execution of its recovery plan. Stakeholders will be watching plant closure announcements and early cost savings reports as leading indicators of progress.