On July 25, one of the most trusted Japanese automakers reported a 99% group operating profit loss, posting a profit of just $6.9 million and an income of just $199 million.
Once one of Japan’s most respected car companies, Nissan’s CEO, Makoto Uchida, blamed the dismal numbers on its performance in one of its most competitive markets: the United States. Sales declined 3.1% to about 237,000 vehicles sold from April to June 2024.
Much of the blame for its poor performance was due to problems with the rollout of new versions of popular models in the U.S. and a lack of hybrid vehicle offerings worldwide. However, its next step mirrors that of another automaker: Stellantis.
Nissan vehicles seen outside a Nissan dealership.
Nissan makes a tough decision to downsize
Japanese automaker Nissan is following Stellantis’ example and offering buyouts to its U.S. salaried workforce to better its fortunes in its second-largest market, according to according to Automotive News.
The automaker told the publication that buyout packages were offered to white-collar Nissan and Infiniti employees who are at least 52 years old and employed in certain non-manufacturing roles and to those 55 years and over in manufacturing roles.
In the U.S., Nissan North America employs about 21,000 people, including about 9,000 hourly workers at three factories in the South. Hourly production workers will not be offered buyout packages.
Related: Feds push for massive recall of deadly, defective airbags
This is not the first time that Nissan has offered its employees buyouts or drastically adjusted its workforce. In 2019 and 2020, the automaker offered similar buyouts and laid-off factory workers. Additionally, it cut employee travel budgets by half in 2019 and furloughed all U.S. employees for two days in 2020.
In a statement to AutoNews, Nissan Spokesperson Kyle Bazemore said that the automaker does not plan on laying off anyone but declined to say how many people it anticipates will take the buyout or how many jobs Nissan intends to cut.
“[Nissan seeks to] optimize business operations and remain competitive for the future,” Bazemore said. “We continue to evolve to meet the needs of the global automotive industry.”
More Automotive:
Hyundai pressured dealers to play dirty sales trick, lawsuit allegesFord CEO sends a stern warning for American car buyersAnalysts have a bleak outlook for car dealers after CDK cyberattack
A similar job-loss situation at Stellantis
Nissan’s move comes after multinational automaker Stellantis (STLA) announced its intentions to trim jobs following a dismal earnings report.
In an email shared with Stellantis employees last week, the automaker offered employees below the vice-president level a package called the “2024 Voluntary Separation Program,” a severance package that also included a lump sum cash payment to cover healthcare costs, three months of outplacement services, and vesting of their 401(k)s.
Though the move is generous, Stellantis said in an email to employees shared with the Detroit Free Press that a lack of volunteers to take the package would trigger “subsequent involuntary actions” such as layoffs.
Related: Stellantis threatens layoffs amid poor earnings
Nissan’s sales woes take a financial toll
In the post-COVID auto world, Nissan’s U.S. business has stumbled. In 2019, its market share was 7.9 percent, and since then, it has dropped to 5.8 percent last year from 2019.
As a result, Nissan is sitting on a large amount of inventory. According to Cox Automotive, Nissan had a 104-day inventory supply at the end of February, compared to just 76 days for the rest of the industry.
With so many cars on hand, they are sitting on dealership lots, prompting massively unprofitable sales deals. According to data from Motor Intelligence, Nissan spent the most among full-line brands on vehicle markdowns, averaging $3,713 per vehicle in discounts and incentives in March this year.
Additionally, data shows that Nissan cars spend some of the longest time sitting unsold at dealer lots, an average of 98 days between being unloaded from a trailer to finding a home on a buyer’s driveway.
In a desperate attempt to shift metal out of the showroom, in May 2024, Nissan sent a memo to dealers stating that dealers could advertise cars for up to 10% off the invoice price (the price dealers paid their respective automaker for an individual vehicle).
Based on its latest decision, it doesn’t seem like that’s moving the needle enough.
Related: Veteran fund manager picks favorite stocks for 2024
