Nissan cuts 9,000 jobs and halves CEO’s pay as it sinks to a loss

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Nissan has launched an emergency turnaround plan that includes 9,000 job losses and a voluntary 50 per cent pay cut for chief executive Makoto Uchida after unveiling it had fallen to a quarterly loss.

Japan’s third-largest carmaker said it would slash global production capacity by 20 per cent and cut costs by ¥400bn ($2.6bn). It downgraded its full-year profit forecast for the second time this year, this time by 70 per cent.

The crisis at Nissan came as it failed to counter a slowdown in global electric vehicle sales with a strong hybrid offering, which has helped rivals Toyota and Honda.

“This has been a lesson learned and we have not been able to keep up with the times,” Uchida said during an online press conference. “We weren’t able to foresee that hybrid electric vehicles and plug-in hybrids would be so popular.”

The troubles at Nissan signal further pressure on the global car industry with most players reporting declining profits due to cut-throat competition from Chinese electric vehicle producers in the world’s largest car market.

Volkswagen has told workers it plans to close several plants in Germany for the first time in its 87-year history, while Stellantis, the owner of Peugeot, Fiat and Jeep, carried out a management overhaul last month following a sharp sales decline in the US.

As part of the measures, Nissan also cut its stake in alliance partner Mitsubishi Motors on Thursday from 34 per cent to 24 per cent to bolster its balance sheet.

Nissan recently turned to a partnership with Honda to survive the competition after a long-standing alliance with France’s Renault significantly weakened in recent years. The two Japanese companies plan to roll out a new electric vehicle before the end of the decade and jointly develop software to go toe-to-toe with Chinese rivals.

Nissan also lowered its production forecast for the full year to 3.2mn cars, down from a previous forecast of 3.45mn, and slashed its annual operating profit forecast by 70 per cent to ¥150bn.

“Facing a severe situation, Nissan is taking urgent measures to turn around its performance and create a leaner, more resilient business,” the company said in a statement.

The job cuts represent almost 7 per cent of Nissan’s workforce, which numbered 133,580 at the end of its previous financial year.

For the July to September quarter, it reported a net loss of ¥9.3bn from a profit of ¥190.7bn a year earlier, on revenues that dropped 5 per cent to ¥2.99tn.

The profit downgrade was its second successive one of the financial year after it lowered its full-year forecast when reporting first-quarter earnings.

Uchida said the company needed a greater focus on its alliances with Honda and Mitsubishi to steady the business and build competitiveness.

The group plans to overhaul its ageing line-up of vehicles by launching new EVs in China and plug-in hybrids in the US.

A new role of chief performance officer will be introduced from December, responsible for sales and profit, designed to enable swifter decision-making on turnaround actions.