Nissan Motor shares plummeted as much as 10% in Tokyo trade on Friday, following the automaker's announcement of a drastic restructuring plan. The company aims to slash 9,000 jobs and reduce its manufacturing capacity by 20% to combat declining sales in China and the United States, reports Reuters.
This news sent shockwaves through the market, with the stock poised for its largest one-day decline since August. It last traded down 6.5% at 383.5 yen, hovering near a four-year low.
To mitigate the impact of these challenges, Nissan slashed its full-year operating profit forecast by a staggering 70% and completely withdrew its net profit forecast. The company expects to save ¥400 billion ($2.61 billion) through this restructuring effort.
Like many global automakers, Nissan is grappling with intense competition from domestic rivals in China, such as BYD, who are capitalizing on the growing demand for affordable electric vehicles and hybrid models.
In the United States, Nissan's lack of a competitive hybrid lineup has hindered its performance in a market where hybrid vehicles are gaining significant traction. CEO Makoto Uchida acknowledged the company's miscalculation in anticipating the surge in hybrid demand and the weaker-than-expected response to revamped core models.
This latest restructuring marks another chapter in Nissan's ongoing struggle to revitalize its business. The company has yet to fully recover from the fallout of former Chairman Carlos Ghosn's ousting in 2018 and the subsequent scaling back of its partnership with Renault.
When asked about potential government support for Nissan, Japanese Economy, Trade and Industry Minister Yoji Muto declined to comment.
Seiji Sugiura, an analyst at Tokai Tokyo Intelligence Laboratory, attributed much of the blame for Nissan's U.S. hybrid woes to management's overreliance on new electric vehicles and traditional models. He criticized the company's mid-term plan, announced in March, as lacking substance and reflecting a fundamental misunderstanding of the market.
Nissan's ambitious mid-term plan, unveiled in March, outlined plans to introduce 30 new models over the next three years, aiming to boost global sales by 1 million vehicles, achieve an operating profit margin exceeding 6% by the end of fiscal 2027, and deliver total shareholder returns of over 30%.
Bd-pratidin English/ Jisan
