Nissan sets out survival plan after first loss in 11 years

29-May-2020 Intellasia | Reuters | 6:02 AM Print This Post

Nissan Motor Co unveiled a plan to become a smaller, more cost-efficient automaker on Thursday as it looks to recover from four years of tumbling profits that culminated in its first annual loss in 11 years.

Under a new four-year plan, the Japanese carmaker will slash its production capacity and model range by about a fifth to help cut JPY 300 billion ($2.8 billion) from fixed costs as it fights for survival in a market hit badly by the coronavirus pandemic.

Nissan is aiming for a 5 percent operating profit margin and global market share of 6 percent under what is its second recovery plan in less than a year.

Nissan posted an annual operating loss of JPY 40.5 billion for the year to March 31, its worst performance since 2008/09. Its operating profit margin was 0.4%.

The automaker sold 4.8 million vehicles during the period, the second decline in a row and a fall of 13 percent from last year, knocking it off its perch as Japan’s second biggest automaker to trail Toyota and Honda.

The plan follows a new strategy announced by Nissan and its partners Renault and Mitsubishi Motors on Wednesday to work more closely on developing and producing cars to reduce costs and ensure the group’s continued existence.

Even before the spread of the novel coronavirus, Nissan’s slumping profits had forced it to row back on an aggressive expansion plan pursued by ousted leader Carlos Ghosn. The pandemic has only piled on the urgency to downsize.

Nissan’s operating profit has tumbled for four consecutive years as its pursuit of market share, particularly in the United States, led to overcapacity at its car plants, steep discounting and a cheapened brand.

The new four-year strategy lays out a path to sustainable profitability and is the vision of Chief Executive Makoto Uchida and Chief Operating Officer Ashwani Gupta, who took over after months of internal turmoil following Ghosn’s arrest in 2018.

Under the plan, Nissan will curb its ambitions for sales growth to target annual sales of about 5 million units, Reuters reported in April, a cut from a previous goal of 6 million cars outlined in July by then-CEO Hiroto Saikawa.

Another top priority will be the preservation of cash. As of December, Nissan’s automotive operations had negative free cash flow of JPY 670.9 billion, a more than six-fold increase from a year ago.

https://the-japan-news.com/news/article/0006576969

 


Category: Japan

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