Nissan "slims down" for self-rescue

Author | Wang Xiaojuan

Editor | Chai Xuchen

The changes in the global automotive industry are still ongoing, and Nissan's self-rescue efforts are far from over.

Recently, it has been reported that Nissan Motor Company is considering laying off 9,000 employees worldwide, with more than 70% of the adjustments involving factory workers and other production departments; the organizational contraction also includes the board structure, which will be reduced from the current 63 members in April.

Currently, Nissan has the largest proportion of employees in Japan, accounting for about 45%, followed by North America at 30%, Asia at 13%, and Europe at 7%. In response to this layoff plan, Nissan will determine the number of layoffs in each region in the coming months and plans to complete this adjustment before the 2026 fiscal year.

The overall contraction is part of Nissan's "slimming down" self-rescue efforts following deteriorating performance and is also a preparation for a merger with Honda. Nissan plans to completely achieve organizational "slimming" to dispel Honda's doubts about Nissan's ability to revitalize its operations.

At the end of last year, Nissan, which had long been seeking ways to save itself, finally received Honda's intervention. On December 23, Honda, Nissan, and Mitsubishi Motors signed a memorandum of understanding, and Honda and Nissan will officially begin merger negotiations, while Mitsubishi Motors will discuss its participation in the merger.

However, merging with Honda does not mean that Nissan can simply recover; Honda has also put forward a series of requirements regarding this merger.

Honda Motor's CEO Mibe Toshihiro clearly stated that before the continuation of the partnership, Nissan must have a solid financial foundation. Honda estimates that by the 2026 fiscal year, Nissan's annual operating profit needs to at least double for the merger plan to succeed.

Achieving this goal is quite challenging for Nissan.

In 2024, Nissan's main markets, China and the United States, both experienced significant declines in sales. From April to September 2024, Nissan's sales in China saw a maximum drop of 14.3%, while the U.S. market declined by 2.7%, and sales in Japan also fell by 2.4%, leading to a 3.8% year-on-year decline in global sales during the same period.

Although the overall decline in sales is not large, Nissan's financial situation is concerning.

Nissan's financial report shows that for the first half of the 2025 fiscal year (April to September 2024), its operating revenue was 5.98 trillion yen, a year-on-year decline of 1.3%; operating profit was 32.908 billion yen, a significant drop of 90.2%; and net profit was only 19.223 billion yen, a staggering year-on-year decline of 93.5%. The operating profit margin was only 0.5%, far below last year's 5.6%.

Looking at individual quarters, Nissan is still in the red. In the second quarter of the 2025 fiscal year (July to September 2024), Nissan reported a net loss of 9.3 billion yen, equivalent to approximately 430 million yuan.

In November 2024, two Nissan executives stated that the company only had a turnover time of 12 to 14 months, and the situation was worsening, urgently needing cash from Japan and the United States. However, the reality is that sales in the Chinese market have significantly declined, and the U.S. market is facing serious aging models and inventory backlog This financial situation not only makes Nissan's self-rescue more urgent but also puts Nissan in a more passive position during merger negotiations. To meet Honda's requirements, Nissan's profits would need to reach nearly 60 billion yen, which is indeed difficult to achieve during a period of declining sales.

Therefore, Nissan has started by reducing fixed costs. Previously, Nissan planned to cut fixed costs by 300 billion yen and variable costs by 100 billion yen in the fiscal year 2024, with the aforementioned layoffs being the most important step. Under financial pressure, Nissan CEO Makoto Uchida announced a voluntary 50% salary reduction, and other senior executives responded similarly.

In addition, Nissan will sell part of its shares in Mitsubishi Motors, plan to reduce global production capacity by 20%, and lower both fixed and variable costs.

It is evident that Nissan is doing everything possible to achieve this goal. Whether or not the merger will ultimately be realized, and how it will be merged, including the share transfer ratio, is expected to be determined by June 2025. If this merger goes smoothly, the merged company will become the world's third-largest automaker, second only to Toyota and Volkswagen, but challenges will continue.

In recent years, the market shares of Nissan, Honda, and Mitsubishi have been declining in major markets, gradually losing their competitive edge in fierce market competition. Data shows that in the first half of 2024, the three companies sold approximately 4 million vehicles globally, far below Toyota's 5.2 million vehicles, which is the largest among Japanese automakers.

Additionally, all three face challenges in the transition to electrification and intelligence.

This situation can also be seen from the performance of the three companies in the Chinese market. Currently, Nissan has not launched any representative intelligent products, lagging in transformation; Honda has introduced a new brand, Ye, and a new model, Ye P, but market recognition still needs further validation; Mitsubishi's story in China ended in 2023, with GAC officially taking over the joint venture in March 2024.

The market share of Japanese cars in China is also further declining. Currently, the overall market share of Japanese brands in China has dropped to 11.2%, a decrease of 3 percentage points compared to a year ago, reaching a historical low. This means that after the merger, they will only face more intense challenges with a larger scale.

The automotive industry is inherently global, and it has been proven that no automaker can remain unaffected by changes, regardless of where those changes originate, including the giants. Only by adapting to changes can each company continue to stand firm. Nissan's struggle for profit growth will continue