Nissan Cuts 9,000 Jobs, CEO Forfeits 50% Pay Amid EV Push

Nissan Motor said on Thursday that it was planning deep cuts to its global operations as it seeks to reorient its business and recover ground lost in the growing markets for hybrid and electric vehicles in China and the U.S. Around 9,000 job cuts are expected at Nissan, about 20% of its global manufacturing capacity, as per the automaker.

(Image Credit: nissannews)

Nissan is works towards cost reduction by $2.6 billion in the current fiscal year amid a sales slump in China and the U.S. The Nissan restructuring plans underline the its fragility, having never fully recovered from the disarray that led to the ouster of former chairman Carlos Ghosn and scaling back of the partnership with Renault.

Cut in Nissan’s CEO’s salary

Nissan’s chief executive, Makoto Uchida, will take a 50% pay cut in his monthly compensation, the company added. Uchida said he would voluntarily forfeit 50% of his monthly compensation starting this month and the other executive committee members will also voluntarily take a pay cut.

Nissan’s operating profit fell 90% percent, to $214 million, during the April-to-September period.

Like many of its peers, including Ford Motor in the U.S. and Volkswagen in Germany, Nissan has struggled to keep pace with rapidly changing consumer preferences in some of the world’s largest car markets.

Nissan’s decline hybrid demand

Nissan’s major problem may be in the U.S., where it lacks a credible line-up of hybrid cars. That’s in contrast to Japanese rival Toyota (7201.T), opens new tab, which has seen a boom in demand for gasoline-petrol hybrid cars.

Nissan misread demand for hybrids in the U.S., as per CEO Makoto Uchida.. “We didn’t foresee HEVs ramping up this rapidly,” he said, referring to hybrid EVs.

“We did start to understand this trend towards the end of last fiscal year,” he said, adding that making some changes to core models didn’t go as smoothly as planned.

Nissan job cuts for restructuring

The Yokohama-based company is planning to cut 9,000 jobs, equivalent to 6.7% of its 133,580 global employees.

Nissan scrapped its net profit forecast due to ongoing restructuring efforts, which it said would reduce costs by 400 billion yen ($2.6 billion) this fiscal year.

Nissan will cut its production capacity by 20%, reduce vehicle development lead time to 30 months and deepen collaboration with its partners including Renault and Mitsubishi Motors , it said.

“We cannot deny that our sales plan was overstretched given the rapid changes in the market,” Uchida said in a briefing on Thursday. Nissan’s sales performance has “demonstrated an inability to cater to customer needs in a timely manner.”

Acknowledging the “great responsibility felt on his shoulders,” Uchida said he and other Nissan executives would take voluntary pay cuts starting this month.

Uchida declined to give any details about the timing or location of the job and production cuts.

Nissan selling Mitsubishi Motors stake

Nissan is also selling up to 10% of its stake in Mitsubishi Motors to raise up to 68.6 billion yen ($445.45 million).

The automaker has 25 vehicle production lines globally and plans to reduce the maximum capacity of those, as per Chief Monozukuri Officer Hideyuki Sakamoto.

Nissan shifting gears

Nissan wants to change line speeds and shift patterns in factories, as per Sakamoto.

The resources freed up by cost reductions will be used to bolster Nissan’s E.V. lineup in China and hybrid offerings in the U.S, as per Uchida. To reduce lead times, the company plans to leverage partnerships, including its recent tie-up with Honda.

Through the fiscal year ending in March, Nissan estimates it will sell 3.4 million vehicles globally, down from its previous forecast of 3.65 million. Nissan’s projects operating profit will fall to $973 million, compared with $3.7 billion the previous year.

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