Nissan’s woes deepen as profits dive, job cuts rise
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Nissan Motor Co Ltd warned yesterday that first-quarter profit tumbled around 90 percent, a day before it is expected to announce more than 10,000 job cuts as the crisis deepens at Japan’s second-largest automaker.
The dismal earnings, due to be formally announced today, mark one of Nissan’s worst quarterly performances in around a decade. The automaker is fighting to rein in its operations after years of aggressive expansion under former chairman Carlos Ghosn, ousted last year in a dramatic scandal that shook the industry.
The planned job cuts over the next few years include the 4,800 detailed in May and will mostly be at factories overseas with low utilization rates, a person with direct knowledge of the matter said yesterday.
Nissan declined to comment on the job cuts. It said a Nikkei business daily report that it suffered a roughly a 90 percent year-on-year drop in first-quarter operating profit was “broadly accurate.”
Nissan is struggling to improve weak profit margins in the United States, a key market where Ghosn for years pushed to aggressively grow market share as chief executive.
Years of heavy discounting to grow sales in the world’s second-biggest auto market have left Nissan with falling demand for the Altima sedan and other models, a cheapened brand image, low resale values and a battered bottom line.
“Deteriorating performance in the United States is a big issue that we’re facing,” Motoo Nagai, chairman of the automaker’s newly formed audit committee, said yesterday. “For a long time, we were concerned with increasing volume. We were chasing numbers. Now it’s time to enhance the brand.”
The job cuts to be disclosed this week would exceed 7 percent of Nissan’s 138,000-strong workforce and are part of a broad “turnaround” strategy to be rolled out later this year, said another source, a top executive who asked not to be named because he is not authorized to speak with the media.
The plan “aimed at unwinding Ghosn’s negative legacies,” which led to excesses.
Regions with significantly under-utilized manufacturing capacity which could be hit by job cuts include India and Brazil, another source said.
The latest job cuts highlight the extent of problems facing Chief Executive Hiroto Saikawa as he also grapples with fractured relations with French alliance partner Renault SA following the arrest of Ghosn, their shared former chairman.
Ghosn has been charged with financial misconduct in Japan.
He denies wrongdoing and is fighting the charges.
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