After posting net losses earlier this month, Nissan CEO Makoto Uchida said the “extremely tough situation” will force some bold restructuring moves.
In addition to downgrades to its full-year sales and operating outlooks, it set out to save $3 billion by drastically reducing its Mitsubishi share and cutting 9,000 from its global headcount of over 133,000 employees.
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At its news conference, Nissan’s Chief Monozukuri Officer (Head of Manufacturing) Hideyuki Sakamoto said that the controversial move will allow its factories to run more efficiently and save money.
“Globally, we currently have 25 vehicle production lines. Our current plan is to reduce the operational maximum capacity of these 25 lines by 20 percent,” Sakamoto said. “One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel.”
Makoto Uchida, president, and CEO of Japanese automaker Nissan, is facing a severe financial challenge.
RICHARD A. BROOKS/Getty Images
Nissan execs ring alarm bells
According to a new report by the Financial Times, unnamed senior officials near Nissan note that the automaker is beginning to exist on borrowed time as it seeks an anchor investor to get it through the year.
“We have 12 or 14 months to survive,” the senior official told FT. “This is going to be tough. And in the end, we need Japan and the US to be generating cash.”
Related: Nissan CEO delivers tough-luck news to workers
This crisis comes as Renault is selling its significant stake in Nissan. Previously, the French automaker owned up to 46% of Nissan, but its share has dwindled to under 36%.
The sources who spoke with the FT noted that the company is looking for a new long-term investor, such as a bank or large insurance group, to replace some of Renault’s equity holdings.
Earlier this month, Nissan’s CEO’s drastic moves attracted the Singapore-based activist investment group Effissimo Capital Management and the Hong Kong-based Oasis Management Group to take their own stakes in Nissan.
These firms are touted as secretive players known for shaking up major Japanese corporations. Previously, Oasis led a push at Nintendo to make mobile games, which led to the success of the popular app Pokémon Go — from which it raked in tens of millions as a result, as per the Wall Street Journal. The former, Effisimo, made close to $768 million after its very proactive investment in Toshiba led to a buyout in 2023.
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A Honda takeover of Nissan?
However, the sources also note that the company hasn’t ruled out the possibility of longtime rival Honda taking a majority stake in Nissan, noting that “all options” are being considered.
Related: Former Nissan CEO thinks alliance is a hidden sinister plot
According to the sources, Renault is considering selling a portion of its Nissan shares to Honda in an effort to restructure its 25-year alliance with Nissan. Renault notes that a more prominent Honda-Nissan partnership would “only be positive” for the French automaker.
Nissan, Honda, and Mitsubishi are currently in a joint venture to share EV technology to accelerate the development of EVs.
Before Mitusbishi joined, Nissan and Honda agreed to “mutual vehicle complementation,” which allows them to share models and complete each other’s lineups of EVs and gas-powered cars.
“Collaboration with partners is essential in today’s automotive industry, which is undergoing rapid changes due to technological innovations such as electrification and intelligence,” Mitsubishi Motors CEO Takao Kato said in a statement. “We believe that we can discover new possibilities in various fields through collaboration among the three companies.”
Former Nissan CEO thinks alliance is a hidden sinister plot
Nissan’s former CEO makes bold speculation
The mention of Honda stands out, as a few months ago, former Nissan CEO Carlos Ghosn alleged that there is more to the story of the Honda-Nissan-Mitsubishi joint partnership.
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In an interview with Automotive News, the former Nissan CEO alleged that Honda was plotting a “disguised takeover” of Nissan and Mitsubishi, noting that Honda was the biggest of the three Japanese automakers.
“I can’t imagine for one moment how it’s going to work between Honda and Nissan unless it’s a takeover, unless it’s a disguised takeover by Honda of Nissan and Mitsubishi with Honda in the driver’s seat,” Ghosn said.
Nissan’s money-crunching situation is still real
No matter who or where Nissan shares and/or ownership go, the automaker still has a dire situation on its hands.
A recent report from Automotive News reports that Nissan told its suppliers that it expects to cut production in its US facilities by 17% during its 2024 fiscal year, which ends on March 31.
The reduced production reflects a 20% global production cut. In a planning document sent to suppliers that AutoNews saw, Nissan said it now expects to build just 503,202 vehicles at its Canton, Mississippi, and Smyrna, Tennessee factories, a large cut from the 605,435 cars it built within the last fiscal year.
These cuts will affect the production of some of Nissan’s top sellers, including the Frontier midsize pickup and the Rogue crossover SUV. The cuts also call for reduced output of the Pathfinder SUV and the QX60 SUV from its luxury Infiniti wing.
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