Following a dip in sales and a net loss during the third quarter, Nissan Motor Corp. shifts gears to cost-cutting “emergency mode,” where it plans to lay off workers and reduce the CEO’s salary.
The automaker plans to lay off 9,000 workers, reduce its global production capacity by 20% and voluntarily cut CEO Makoto Uchida’s monthly compensation by half.
Nissan currently employs 133,000 people globally, which means 6% of the workforce will be laid off. It is unknown where exactly the layoffs will occur.
“These turnaround measures do not imply that the company is shrinking,” Uchida said in a press statement. “Nissan will restructure its business to become leaner and more resilient, while also reorganizing management to respond quickly and flexibly to changes in the business environment.”
In its recent earnings release, the company reported a decline in net revenue and an operating profit margin of 0.5% due to rising manufacturing costs, higher selling expenses and inventory optimization efforts, particularly in the U.S. The company plans to reduce fixed costs by 300 billion yen, almost $2 billion, and variable costs by 100 billion yen, around $651 million.
As other executives are also expected to voluntarily cut their compensations, the company will appoint a chief performance officer next month to oversee the decision-making process of the executive board.
Looking forward, the company plans to advance the introduction of new energy vehicles in China. The U.S. focus will involve shifting to plug-in hybrids and e-POWER, while increasing sales per model to enhance model efficiencies.
Nissan announced its restructuring efforts on the same day Mitsubishi Motors Corp. said it would buy back 10% of its shares from Nissan, amounting to 149,028,300 shares valued at $3.01 per share at current exchange rates. This shrinks Nissan’s total stake in Mitsubishi from 34.07% to 24.05%.
Still, Mitsubishi said that the brands will continue to collaborate on projects.
“Nissan and MMC will continue their collaborative efforts to drive innovation and deliver exceptional value to their stakeholders,” Nissan said in a press statement. “Together, the Alliance companies are actively engaged in high-value creation projects that respond to evolving industry trends.”
