Nissan Motor Co. is planning to cut some 12,500 jobs and reduce its production of vehicles after announcing financial results for the three-month period ending June 30, 2019.
In the first quarter of the fiscal year, Nissan generated an operating profit of 1.6 billion yen on net revenues of 2.37 trillion yen, equivalent to an operating margin of 0.1 per cent. First quarter net income fell by 94.5 per cent to 6.4 billion yen.
Global total industry volume remained weak during the quarter, and Nissan’s unit sales decreased as the company continued its efforts to normalize sales. Profitability was negatively impacted by the decrease in revenues and external factors such as raw material costs, exchange rate fluctuations and investments to meet regulatory standards.
In the U.S., Nissan’s sales totalled 351,000 units, equivalent to a market share of 7.9 per cent.
As a result, Nissan is implementing strategic reforms in order to build an operational base that will ensure consistent and sustainable profitability over the medium term.
The company is moving quickly to optimize cost structures and manufacturing operations, while also enhancing brand value, steadily refreshing its lineup and achieving consistent growth globally, including in the U.S.
To improve its overall utilization rate, Nissan will reduce its global production capacity by 10 per cent by the end of fiscal year 2022. In line with production optimizations, the company will reduce headcount by roughly 12,500. Furthermore, the company will reduce the size of its product lineup by at least 10 per cent by the end of fiscal year 2022 in order to improve product competitiveness by focusing investment on global core models and strategic regional models.
While some of these initiatives are already underway, the company expects that substantial improvements in its performance will take time.