Reports indicate that Nissan Motor Co., as part of its cost-cutting measures, will lay off 9,000 employees globally, including some in Japan. Additionally, the company's 63-member board structure will be reduced starting in April.
Nissan plans to reduce fixed costs by ¥300 billion and variable costs by ¥100 billion in fiscal year 2024. These measures include cutting 9,000 jobs globally and reducing production capacity by 20%, approximately 1 million vehicles. However, questions remain about whether Nissan can boost sales and remain competitive in the challenging global market, even with these cost-saving measures.
9,000 Layoffs May Be Just the Start
Internet analyst Ding Daoshi commented to Gasgoo Auto that layoffs are one of the quickest ways to reduce costs and improve efficiency. Following Nissan's merger with Honda, some departments became redundant, eliminating the need for excess staff.
Nissan is under immense pressure to significantly improve its operating profit. For the first half of fiscal 2024 (April–September), Nissan's operating profit plummeted 90.2% year-over-year to ¥32.9 billion. As a result, the company has lowered its full-year operating profit forecast for fiscal 2024 (April 2024–March 2025) to ¥150 billion (about $950 million), a 74% drop compared to fiscal 2023.
In addition to global layoffs, Nissan will take measures to cut costs by reducing selling, general, and administrative expenses, optimizing its asset portfolio, and more. Even Nissan's President and CEO Makoto Uchida will voluntarily forgo 50% of his monthly salary starting November 2024, with other executive committee members taking proportional salary cuts. Nissan will also reduce its stake in Mitsubishi from 34% to 24% to improve cash flow.
Ding Daoshi predicted that the global layoffs of 9,000 employees are likely only the beginning. Considering Nissan's size and scale, further and larger layoffs may follow.
As of March 2024, Nissan employed 133,580 people worldwide, with around 45% in Japan, 30% in North America, 13% in Asia, and 7% in Europe. The 9,000 planned layoffs account for approximately 7% of Nissan's total workforce.
"The automotive industry is becoming increasingly centralized, highly intelligent, and moving towards automated production across multiple environments. This means the need for employees will continue to decrease. Future layoffs at Nissan should be closely monitored," Ding added.
A Merger Tied to the Future of Japan's Automotive Industry
Previously, Honda President Toshihiro Mibe stated that Nissan's cost-cutting measures were a prerequisite for their merger. Nissan's workforce restructuring aims to alleviate Honda's concerns about Nissan's ability to revive its business operations, paving the way for a successful merger agreement by June 2025.
In December 2024, Honda, Nissan, and Mitsubishi Motors signed a memorandum of understanding. Honda and Nissan will formally begin merger negotiations, with Mitsubishi Motors exploring its role in the merger.
The plan involves Honda and Nissan jointly establishing a holding company under which both companies will operate as subsidiaries. Details such as the holding company's name, shareholding proportions, and personnel arrangements will be finalized in subsequent negotiations. Honda and Nissan aim to finalize the merger agreement by June 2025, with the holding company to be formally established and listed by August 2026.
However, uncertainties have emerged regarding this seemingly planned merger.
According to media reports, during the joint press conference announcing the memorandum, Toshihiro Mibe stated that Nissan must have a solid financial foundation before the partnership continues. Honda estimates that by fiscal 2026, Nissan's annual operating profit must increase at least twofold for the merger to succeed.
To meet Honda's expectations, Nissan must overhaul its management structure and improve operational efficiency, targeting an operating profit of ¥400 billion (approximately $2.6 billion) by fiscal 2026.
Ding Daoshi pointed out that this merger involving Nissan, Honda, and Mitsubishi is a historic restructuring of three major brands. It is no longer just a corporate partnership but a significant reorganization of Japan's automotive industry.
In 2024, Japanese automakers saw declining market positions in China. Nissan's sales in China fell 12.2% year-over-year to 696,000 units, while Honda's terminal sales in China dropped 30.94% to 852,300 units, compared to 1.234 million units in 2023. Toyota also experienced a 6.9% year-over-year decline in China, with sales of 1.776 million units in 2024.
