Search Here

Nissan faces a major crisis as it announces deep job cuts and factory closures after failed merger talks with Honda.

Nissan Motor is taking drastic steps to survive one of its worst financial years in decades. On Tuesday, the automaker announced it will cut 20,000 jobs and shut down seven manufacturing plants by 2027.

The decision follows a failed merger with Honda and growing pressure from falling sales and rising global trade tensions.

The Japanese carmaker reported a net loss of 670.9 billion yen (around $4.5 billion) for the financial year ending in March—its biggest annual loss since being rescued by Renault 25 years ago. '

Nissan also posted an 88% drop in operating profit, totaling only 69.8 billion yen ($472 million), Reuters said.

Newly appointed CEO Ivan Espinosa, who stepped into the role in April, said the company must move quickly to recover.

"Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support," Espinosa stated during his first earnings briefing.

Nissan Cuts Production Amid Struggles in US and China

The job cuts include 9,000 previously announced in November. These reductions are part of a broader plan to save 500 billion yen by simplifying parts and reducing production.

According to SCMP, Nissan plans to lower its annual production capacity from 3.5 million vehicles to 2.5 million.

The crisis has been building for some time. Nissan has struggled with aging vehicle models that haven't kept up in key markets like the US and China.

The failed Honda merger added to the pressure, especially as new rivals from China gain ground in the electric vehicle space.

Espinosa said Honda remains "one of many candidates" for future partnerships, noting that talks around electric vehicles and battery collaboration are still ongoing. However, he offered no timeline for a new deal.

The company is also facing a tough trade environment. US tariffs are expected to cost Nissan 450 billion yen, mainly affecting cars exported from Mexico and Japan.

CFO Jeremie Papin warned the company anticipates a 200 billion yen operating loss in the first quarter alone.

Despite the turmoil, Espinosa is pushing forward with restructuring and hopes to strengthen partnerships with Renault in Europe, India, and Latin America, and with Mitsubishi in the US.

Shares in Nissan rose 3% after the announcements, although they remain down 26% for the year.

Tags

Job cuts