Nissan revealed massive cost cuts on Tuesday, saying it would eliminate 11,000 more jobs and scale back production. The new layoffs will bring Nissan’s total workforce reduction to around 20,000 jobs, after it previously announced plans to cut 9,000 positions.
This comes following a tumultuous financial year, where its profit declined 88% from the previous year. The Japanese automaker had been affected by declining sales in the United States, and China. It then saw talks of a merger with Honda, and was forced to replace its CEO. Like its rivals, it has also been affected by tariffs and faces stiff competition from Chinese electric vehicle makers in markets in Southeast Asia and elsewhere.
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Analysts have said Nissan is now paying the price for years under former CEO Carlos Ghosn when it focused too heavily on sales volume and used heavy discounts to keep cars moving off lots. That has left it with an aging line-up that it is now trying to update. Espinosa now faces the difficult task of turning around the automaker’s brand value.
Espinosa said Nissan must prioritize self-improvement with greater urgency and speed, and aim for profitability by relying less on volume.
Yesterday Nissan unveiled “Mobility Intelligence for Everyday Life.” AI across 90% of its vehicles. Autonomous driving partnerships. The CEO says they want to “enrich how mobility is experienced.”
Espinosa said the company was pinning its hopes on “AI-defined vehicles”, with an aim of installing autonomous driving technologies on 90% of its vehicles in the future. On Tuesday, he announced at an event at Nissan’s headquarters in Yokohama, Japan, that the company would reduce the number of cars it made from 56 to 45 models in order to divert investment to more profitable models.
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“Our performance pressures emerge from structural challenges compounding over time,” Espinosa said. “Our portfolio aged faster than the market, costs rose faster than volumes, fixed costs and complexity remain high, even as scale declines.”
The fast rollout of self-driving abilities will be a key part of Nissan’s efforts to increase sales in Japan by 550,000 a year by 2030 as well as to reach 1 million in the U.S. and China. The self-driving push is likely to benefit Wayve, the British AI startup that signed its first technology deal with Nissan a year ago.
Masahiro Akita, an analyst at Bernstein, a research business, said the plans were reasonable, but he added: “Amid ongoing macro uncertainty, it remains unclear whether Nissan can deliver sustained top-line growth and achieve a genuine turnaround.”