What’s Happening Financially with Nissan in 2024?

Nissan Motor Co., a giant in the automotive industry, is facing significant financial challenges that threaten its stability. From profit declines to leadership changes, here’s a breakdown of what’s happening with Nissan and its potential impact on the auto world.

Major Financial Setbacks

In November 2024, Nissan revised its annual operating profit forecast down by 70%, now projecting a profit of just 150 billion yen (approximately $975 million). This alarming drop follows a global sales decline of 3.8% in the first half of the fiscal year. Key markets, including China and the U.S., reported significant downturns:

China: Sales fell by 14.3%.
United States: A decline of nearly 3%.

These financial setbacks have prompted Nissan to take aggressive corrective measures.

Strategic Restructuring Efforts

To address these challenges, Nissan has launched an emergency turnaround plan. Key initiatives include:

Workforce Reduction: Cutting 9,000 jobs worldwide to streamline operations.
Production Cuts: Reducing global manufacturing capacity by 20% to align with market demand.
Asset Liquidation: Selling part of its stake in Mitsubishi Motors, lowering its shareholding from 34%.

These steps are part of Nissan’s broader strategy to reduce costs and regain financial stability.

Leadership Changes

Nissan CFO Stephen Ma, who has been with the company since 1996 and assumed the CFO role in 2019, is stepping down. His departure comes as the company navigates declining sales and profitability. Leadership transitions like these often signal the need for fresh strategic direction.

Alliance Restructuring

Nissan’s alliance with Renault and Mitsubishi has undergone significant changes. Renault has reduced its controlling stake in Nissan from over 30% to 15%, allowing Nissan to regain voting rights. This rebalancing aims to strengthen the partnership while giving Nissan more autonomy in decision-making.

Exploring New Partnerships

To secure its future, Nissan is exploring a potential partnership with Honda. Talks include collaboration on electric vehicle development and the possibility of Honda acquiring a stake in Nissan, though such a move is seen as a last resort.

Market Challenges

Several external factors are compounding Nissan’s financial woes:

Lagging in Hybrid Technology: Nissan’s slow adoption of hybrid and plug-in hybrid models has left it trailing competitors like Toyota and Honda.
Geopolitical Risks: Proposed U.S. tariffs on vehicles imported from Mexico could disrupt Nissan’s supply chain, as a significant portion of its production is based there.

The Future of Nissan

Nissan’s aggressive restructuring plan, leadership changes, and exploration of new partnerships signal that the company is at a critical juncture. The coming months will reveal whether these efforts are enough to restore its financial health and competitive standing.