Nissan to cut 9,000 jobs globally after net income drops by 94%; CEO accepts these 'big problems'

Japan's third-largest auto company Nissan Motor Corp. has announced a drastic overhaul of its global operations, aiming to regain lost ground in the rapidly evolving electric and hybrid vehicle markets. The Japanese automaker will eliminate 9,000 jobs and reduce production capacity by 20%. CEO Makoto Uchida will also take a 50% pay cut.

The restructuring cost-cutting measures come after Nissan's net income plummeted 94% in the first half. Nissan will also sell off some of its stake in Mitsubishi Motors Corp after burning through ¥448.3 billion ($2.9 billion) in cash during the last six months. The company's operating income is down 70% from its previous forecast. Management also lowered their revenue outlook by more than 9%, meaning they now expect virtually no growth for the year.

What is hurting Nissan big time

Nissan President and CEO Makoto Uchida said: “These turnaround measures do not imply that the company is shrinking. 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. We aim to enhance the competitiveness of our products, which are fundamental to our success, and set Nissan back on a path of growth. As a cohesive team, we are dedicated to working together to ensure the successful implementation of our plans.”

The CEO reportedly told investors that Nissan has been affected “not only by external challenges, but also by our specific issues,” alluding both to the breakneck rise of Chinese automakers and Nissan setting overly ambitious sales targets.

Like many traditional automakers, Nissan has struggled to adapt to shifting consumer preferences. In China, domestic brands like BYD have capitalized on the surge in EV demand, while in the U.S., hybrid vehicles are gaining popularity, favoring competitors like Toyota.

Nissan CEO: We cannot deny ...

Uchida acknowledged the company's missteps, stating, "We cannot deny that our sales plan was overstretched." To address these challenges, Nissan will invest in its EV lineup in China and expand its hybrid offerings in the U.S. The company also plans to leverage partnerships, such as its recent tie-up with Honda, to streamline production and reduce costs.

With these aggressive measures, Nissan aims to secure a more competitive position in the global automotive market. However, the road ahead remains uncertain as the industry continues to undergo rapid transformation.