- Nissan’s profit margins collapsed in the last fiscal quarter
- CEO Hiroto Saikawa announced global job cuts to revive the company’s operating profit.
- Nissan aims to drive retail sales and drop profit-sapping incentives.
Sales fell in every major market except China.
After the scandalous exit of former chairman Carlos Ghosn, Nissan finds itself in financial trouble. Current CEO Hiroto Saikawa announced Nissan Motor Co. would cut some 12,500 global jobs in an effort to revive and overhaul the company. In the last quarter alone, Nissan’s operating profits shriveled by 99 percent, the company reported Thursday in its quarterly results. That amounts to just 1.6 billion yen ($14.8 million) in Nissan’s fiscal first quarter, which ended on June 30.
During the same period, the company’s net income dropped 95 percent to 6.4 billion yen ($59.3 million). Much of these figures hinge around the company’s sliding sales, which fell 6.0 percent globally, to 1.23 million vehicles.
Automotive News reported Saikawa’s comments upon reporting Nissan’s quarterly financial figures. “The results were really more negative than we expected,” said Saikawa. “We thought the situation would be challenging. But the actual retail performance was slightly under what we expected. We have to admit that.”
To that end, he reportedly wants to rebuild U.S. sales totals to 1.4 million vehicles in the fiscal year ending March 31, 2023. So far in this calendar year, Nissan sold 717,036 vehicles, down 8.2 percent from the same point in 2018. Last year, Nissan’s profit margins were a slim 2.7 percent, while Saikawa aims for a 6 percent margin by 2023.
Global job cuts
In aiming toward more sustainable profit margins, Saikawa announced global job cuts by March 31, 2023. Nissan will reportedly cut 12,500 jobs by that time — about 9 percent of the company’s 140,000-strong workforce. That includes 4,800 job cuts already announced in May. On Thursday, Saikawa said 6,400 job cuts are already underway through the end of the current fiscal year that ends on March 31, 2020.
The current round of job cuts includes 1,420 jobs in the United States; 1,000 jobs in Mexico; 90 jobs in the United Kingdom; 470 jobs in Spain; 830 jobs in Indonesia; 880 jobs in Japan; and 1,710 jobs in India. Beyond that, Nissan will cut 6,100 more jobs globally through fiscal year 2023.
Nissan’s brand value
Saikawa is also trying to move Nissan away from profit-sapping incentives and fleet sales. Both moves drove volume sales under Ghosn, but ultimately dinged the brand’s overall value when it came to retail sales. “Not to push wholesale but to increase retail, that was the starting point of the plan,” said Saikawa. Nissan has since cut U.S. incentive outlays by 3.0 billion yen ($27.8 million).
Most of the industry is currently down on 2018 sales figures. Nissan’s wholesale shipments dropped 10 percent in the first quarter, and its supply of vehicles in inventory increased slightly from early in the year. Now, the pivot is toward boosting retail sales to increase profit margins. Perhaps, if Saikawa’s plan is successful, Nissan will stem the flow from its current troubled state.