Nissan shares plunge after announcement of job cuts and production reductions

Nissan Motor's shares fell as much as 10% in Tokyo trading Friday after the automaker said it would cut 9,000 jobs and cut manufacturing capacity by 20%. Its stock fell to a four year low as the carrier on track for its biggest single day loss since August. However it last traded 6.5% lower at ¥383.5.

Nissan, which is grappling with a slide in sales in key markets like China and the United States, had no choice. Nissan also scrapped its full-year net profit forecast on Thursday, a frightening update that came with a 70 percent cut to its full year operating profit forecast. The company said it had to undertake restructuring efforts to address the financial challenges and physical site congestion, and that they will cut costs by ¥400 billion (USD 2.61 billion) by March 2024.

Nissan reflects the troubles of a global auto industry. But in China, the company’s losing market share to local rivals like BYD, which is stealing ground with affordable electric vehicles (EVs) and hybrid models, packed with the latest software. In the U.S., where Nissan is struggling with heavy demand for hybrid vehicles, its lineup of such models lags and the company acknowledges it did not foresee that demand. Nissan didn't expect its hybrid demand to rise so rapidly in the U.S. and revamped versions of its core models had not performed as expected, CEO Makoto Uchida acknowledged on Thursday.

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Nissan's restructuring plan is the latest chapter in a company's efforts since 2018 to turn the page on bleak performances that followed the sacking of former Chairman Carlos Ghosn. The move also is part of the uncertainty surrounding the company's future as it scaled back its partnership with Renault.

Nissan's troubles have drawn criticism from analysts, including Seiji Sugiura of Tokai Tokyo Intelligence Laboratory, who argued that management’s focus on traditional and EV models, rather than hybrids, was a major misstep. He called the company’s recent mid-term plan, which promised 30 new models and a 6% profit margin by 2027, "meaningless" in light of its current challenges.