Nissan Motor recently announced significant restructuring in response to poor sales, especially in the U.S. and China. The Japanese automaker plans to cut 20% of its global manufacturing capacity, leading to the elimination of around 9,000 jobs. The company also slashed its annual profit forecast by 70%, down to $975 million, as it faces mounting pressure from competition in key markets. This restructuring is aimed at cutting administrative costs and realigning resources to better meet market demands as the company struggles to maintain its footing.
One key factor contributing to Nissan’s difficulties is the strong competition in the electric vehicle (EV) market in China and the increasing popularity of hybrids in the U.S. Nissan has been slow to adopt hybrid technology, an area where competitors like Toyota have thrived. CEO Makoto Uchida acknowledged this miscalculation, noting that the company did not anticipate the rapid rise in hybrid electric vehicles (HEVs). Nissan’s hybrid offerings, like the Rogue SUV, were discontinued in 2019, leaving the company at a disadvantage, though it plans to reintroduce a plug-in hybrid version of the Rogue next year.
China’s EV market is another area where Nissan is struggling to compete, particularly against local manufacturers like BYD, which are producing affordable EVs and capturing a large share of the market. Nissan’s sales in China fell by 14.3% for the first half of its financial year, significantly impacting its revenue. Meanwhile, in the U.S., Nissan also reported a 3% drop in sales, adding to its financial challenges. The divergent trends in EV adoption in these regions have put Nissan in a difficult position, where it must adapt rapidly to sustain its market presence.
In an unrelated move on the same day as Nissan’s restructuring announcement, Mitsubishi revealed that it would buy back 10% of its shares from Nissan. The share buyback, valued at $448.58 million, will reduce Nissan’s ownership in Mitsubishi from 34.07% to 24.05%. Mitsubishi stated that the decision was based on a broader trend of reducing cross-shareholdings and aiming to improve capital efficiency. Although both companies announced significant decisions simultaneously, they have not explicitly connected these actions.
Despite this reduction in ownership, Mitsubishi emphasized that it would continue to collaborate with Nissan on various projects. The two companies have recently partnered on several vehicle developments, including a new pickup truck intended for the U.S. market. The Renault-Nissan-Mitsubishi Alliance remains intact, though it is uncertain how these recent strategic changes will affect the companies’ future joint projects and the overall direction of the alliance.