Nissan CEO Makoto Uchida says the company must take further action to turn things around.
Three years ago, Nissan was part of an alliance positioned to sell more vehicles than any other automaker on the planet. Now, after a battle for leadership of the company, falling sales and the impact of a global pandemic, the automaker is restructuring to become a much smaller company.
The Japanese automaker is in the midst of a massive restructuring, some of which calls for building and selling as many as 1 million fewer vehicles annually, Reuters reported.
Nissan’s been struggling for some time, with sluggish sales only exacerbated by the issues surrounding the ouster of former Chairman Carlos Ghosn and those that came with his successor, Hiroto Saikawa. After Saikawa became embroiled in his own scandal, he was replaced by the current CEO Makoto Uchida.
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Nissan moved production of the X-Trail from its plant in Sunderland, England, to Japan due to Brexit issues.
Uchida, who headed up the automaker’s operations in China before taking over as CEO, is known for looking at things from a global perspective. His plans to expand globally appear to be less grandiose than those of the big-thinking Ghosn, especially with a slowing cash flow heightened by the coronavirus.
Although sources told Reuters that sales are expected to be lower under the restructured company, it’s unclear if there will be a target number and if there is a target number that it will be revealed publicly.
Reuters reported that Nissan’s plans for restructuring through to March 2023 based on annual sales of 5 million cars by then, two sources said, adding this would entail a large reduction to manufacturing capacity. Those numbers are lower than either of Uchida’s predecessors.
(Nissan’s turnaround chief latest to leave, dealing automaker another blow.)
“For years, Nissan was looking for annual sales volumes around 7-8 million vehicles. The company has never managed to sell much more than 5 million or so,” one of the sources told Reuters. “The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020-2022.”
Nissan is rumored to be looking to cut back production levels as it restructures, which could mean the closure of as many as four plants worldwide.
A third senior company source said the figure could be even lower than 5 million given the impact of the virus, which has hammered car demand around the world. The sources declined to be identified as details of the turnaround plan have yet to finalized.
The company’s already stated it plans to reduce its global production capacity to 6.5 million vehicles, which is less than the 8 million Ghosn figured the company would sell. If it pares all the way back to 5 million, it would require shuttering three or four plants and the loss of thousands of jobs.
Nissan declined to comment on its progress in devising a new mid-term plan. “The details will be shared in May,” a spokeswoman told Reuters.
(New Nissan CEO aims to “regain trust,” “restore business performance.”)
The people said that a key metric of the recovery plan will be its operating profit margin. Uchida is likely to keep Saikawa’s target for a margin of about 6%, one of the people told Reuters. In the third quarter, the margin was just 0.9%.