Nissan, one of the giants of the Japanese automotive industry, is going through a critical moment that puts its immediate future at stake. Faced with a landscape riddled with challenges, from fierce competition from Chinese brands to drastic changes in consumer patterns, the company has entered a race against time to ensure its survival in the coming months. According to internal sources, the automaker has just 12 to 14 months to turn its situation around and avoid catastrophic consequences.
The pressure on Nissan is not only coming from the global market, but also all the internal and leadership transformations it faces. The company has announced extensive staff cuts, affecting more than 9.000 employees worldwide, representing 7% of its total workforce. This decision, although painful, is part of an effort to reduce costs in the face of a 94% drop in its net profits during the first half of 2024.
Nissan is immersed in extremely competitive markets…
Nissan is in a particularly vulnerable position due to the Unstoppable rise of Chinese manufacturers, such as BYD, which have gained significant ground in key markets such as China and Europe. In the Asian giant, combined sales of Nissan and its sub-brands barely reached 435.603 units between January and August 2024, a figure that pales in comparison to BYD's monthly numbers.
In Europe, the situation is no less worrying and difficult. Although popular models such as the Qashqai and Juke maintain some relevance, the automaker faces difficulties in competing with cheaper and more sustainable options. In addition, the possible cancellation of the launch of the new electric Micra, which could be replaced by a model developed in collaboration with Honda and not with Renault with its new Twingo E-Tech.
The hybrid and electric dilemma
Nissan bet early on electric cars with models like the Leaf, but the growing popularity of hybrid vehicles took it by surprise. In the US, this segment has grown at a pace that few expected, due to the high costs of electric vehicles and the lack of adequate charging infrastructure. This has left Nissan at a disadvantage, especially after discontinuing its Rogue hybrid model in 2020 without launching a successor.
Now, the automaker is trying to catch up with a strategy to introduce its e-Power hybrid system in the United States in 2026, while considering developing plug-in hybrid versions for this country. However, these moves come at a time when limited resources force the company to prioritize short-term strategic decisions, such as generating liquidity in Japan and the United States.
The role of new investors
Nissan's relationship with long-time partner Renault is changing as the French company plans to reduce its stake in the Japanese automaker. This gap could be filled by Honda, which is emerging as a potential long-term investor. The two companies have already signed a memorandum of understanding to explore synergies in key areas such as electrification and artificial intelligence applied to cars.
However, time is running out. A senior Nissan official recently said that the situation is at a critical stage and that the decisions taken in the coming months will determine the future of the company. “We have 12 or 14 months left to live,” he said, making clear the magnitude of the challenge.
Economic and strategic challenges
Nissan's financial problems are also evident in its revenue projections. The company expects a 70% reduction in its operating profits and a significant drop in sales earnings. This set of figures underlines the need for drastic adjustmentsNissan, meanwhile, is revising its production plan for 2024, cutting its target by 50.000 units to 3,65 million vehicles.
In addition, salary cuts have reached the highest positions in the hierarchy. Nissan CEO Makoto Uchida cut his salary by 50% as a sign of commitment. However, the company leader also faces immense pressure to implement changes that guarantee the viability of the business in such a hostile environment.
Nissan's crisis illustrates a broader issue affecting the entire industry. From Europe to the US, automakers are grappling with stricter environmental regulations, economic uncertainty and the need to adapt quickly to new technologiesCompanies such as Ford and Volkswagen have shown similar symptoms of vulnerability in this context.
Despite the gloomy outlook, the Nissan's next strategic decisions will be crucial to determining whether the Japanese automaker can overcome these obstacles and regain its position in an increasingly competitive market.
Source - Automotive News
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