Nissan slashes 9,000 jobs and 20 per cent of global production as sales slump in China and US

NissanMotor will cut 9,000 jobs and 20 per centof its global manufacturing capacity, the automaker said on Thursday (Nov 7), as it scrambles to reduce costs by $2.6 billion in the current fiscal year amid a sales slump in China and the US.

The plans underline the vulnerability of Japan's third-largest automaker, having never fully recovered from the disarray that led to the 2018 ouster of former chairman Carlos Ghosn and scaling back of the partnership with Renault SA.

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Nissancut its annual profit outlook by 70 per centto 150 billion yen ($975 million) on Thursday, the second time it lowered the forecast this year. Like many foreign automakers, it is struggling in China where BYD and other local manufacturers are gobbling up market share with affordable EVs and hybrids that boast advanced technology.

ButNissan's graver problem may be in the United States, where it lacks a credible line-up of hybrid cars. That's in contrast to Japanese rival Toyota, which has seen a boom in demand for gasoline-petrol hybrid cars.

Nissanmisread demand for hybrids in the United States, CEO Makoto Uchida told a press conference.

"We didn't foresee HEVs ramping up this rapidly," he said, referring to hybrid EVs.

"We did start to understand this trend towards the end of last fiscal year," he said, adding that making some changes to core models didn't go as smoothly as planned.

The Yokohama-based company is planning to cut 9,000 jobs, equivalent to 6.7 per centof its 133,580 global employees.

It scrapped its net profit forecast due to ongoing restructuring efforts, which it said would reduce costs by 400 billion yen ($2.6 billion) this fiscal year.

Uchida said he would voluntarily forfeit 50 per centof his monthly compensation starting this month and the other executive committee members will also voluntarily take a pay cut.

Nissanwill cut its production capacity by 20 per cent, reduce vehicle development lead time to 30 months and deepen collaboration with its partners including Renault and Mitsubishi Motors, it said.

Uchida declined to give any details about the timing or location of the job and production cuts.

Nissanis also selling up to 10 per centof its stake in Mitsubishi Motors to raise up to 68.6 billion yen ($445.45 million).

The automaker has 25 vehicle production lines globally and plans to reduce the maximum capacity of those, Chief Monozukuri Officer Hideyuki Sakamoto told reporters.

One method would be to change line speeds and shift patterns in factories, he said.

Operating profit for the July-September second quarter tumbled 85 per centto 31.9 billion yen, far below an LSEG consensus estimate of 66.8 billion yen.

Nissan's global sales fell 3.8 per centto 1.59 million vehicles for the first half of the financial year, largely due to a 14.3 per centdrop in China.

USsales fell almost three per centto about 449,000 vehicles. Together, the two markets account for nearly half ofNissan's global sales by volume.

Honda Motor reported on Wednesday a surprise 15 per centdrop in second-quarter operating profit due to a heavy sales drop in China, sending shares in Japan's second-largest automaker down five per cent.

($1 = 154.0000 yen)

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