Nissan’s financial travails continue

RED ink continues to flow at Nissan with the 92-year-old Japanese automotive manufacturer reporting a near record $A7.0 billion loss on massive restructuring charges incurred from a faltering turnaround for the Japanese fiscal year ended March 31.

It has prompted recently appointed CEO Ivan Espinosa to signal a doubling of already announced job cuts adding a further 10,000 to the 9000 global cull notified in November last year along with more factory closures.

Unusually, the closures may include plants in Japan in an attempt to get the automaker back on track financially amid increased costs, ballooning inventory and slowing sales.

At a financial results announcement earlier this month in Japan, Mr Espinosa, who has only been in the hot seat at Nissan for a bit more than a month, was reported in Automotive News publication as saying, “are we confident that this is enough?”.

“The answer is yes, this will be enough to drive the results that we need, but we need to move fast, we want to bring the heartbeat back,” he said.

Automotive News reported that Mr Espinosa is turning up the heat on Nissan Motor Company’s comeback with a new revival plan called Re:Nissan.

“It is his first comprehensive plan since taking office and in addition to the job cuts aims to shutter seven assembly plants globally,” said the report.

During the announcement Mr Espinosa also reflected on the uncertainty of tariffs that may exacerbate Nissan’s plight prompting the company to withhold earnings guidance for 2025.

According to Automotive News, Nissan wants to consolidate its global production base to 10 assembly plants, from 17, by the fiscal year ending March 31, 2028, meaning four more closures than previously targeted.

“The cutbacks will be global and include actions in Japan,” added Mr Espinosa.

Nissan has plants in mind for culling, but Mr Espinosa declined to identify them, clarifying only by saying that after focusing on assembly plants, the company will turn its attention to streamlining powertrain plants.

The 22-year Nissan stalwart acknowledged, “it is a very, very painful and sad decision to take”, stressing that the stepped-up actions should finally be enough to stabilise Nissan after several years of deteriorating performance.

“We wouldn’t be doing this if it was not necessary for the survival of Nissan,” he emphasised.

According to Automotive News, industry insiders suggest the moves are aimed at right-sizing the company to global capacity of some 2.5- to 3.0 million vehicles in the fiscal year ending March 31, 2028.

Nissan is bloated with unused capacity at factories around the world. But by the end of the plan, the company aims to be at full capacity.

Nissan is reportedly (still) in talks with Mitsubishi and Honda with a view to soak up some of the excess capacity through joint manufacturing in the US, where global companies are trying to source more product.

“The size of the company is just not sustainable. If we didn’t do something now, the problem would only get worse,” stated Mr Espinoza.

“We need as a company to be faster, quicker, more decisive.”

The latest loss was slightly less than the record net loss from 2000 which almost bankrupted Nissan which had to be rescued by French partner Renault.

“(Mr) Espinosa takes over a gigantic task that is still a work in progress,” reported Automotive News.

“The former chief planning officer must scale back global capacity, rekindle flagging sales, refresh an aging line up, wrangle billions of dollars in fixed and variable cost cuts, pay off a mountain of debt, restore the company’s credit rating to above junk status and dig out of record red ink.”

It’s a task Mr Espinosa admits its “very big, and very challenging”.