Alongside its well-known domestic rivals like Toyota (TM) and Honda (HMC) , Japanese automaker Nissan (NSANY) is known for making inexpensive and trusty cars that enable Americans and their families to get around.
Since 1960, cars bearing nameplates like Altima, Maxima, and Z, among a plethora of other well-known models have been familiar sights on highways and driveways across the country.
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Additionally, the automaker has been an innovation leader in technological breakthroughs, including fancy new paint that reflects heat on hot summer days.
Though the automaker enjoys its laurels and storied past, Nissan has lagged behind its rivals despite tougher conditions for the industry as a whole. However, it is taking drastic steps to get back on course.
Nissan begins a huge restructuring push
After reporting net losses in the automaker's latest quarter, Nissan Motor CEO Makoto Uchida said early on Nov. 7 that the company is in an "extremely tough situation" that forces him to make bold restructuring moves to drive growth.
Alongside downgrading its full-year sales and operating outlooks, Nissan will cut 9,000 people from its workforce, slash a significant part of its production capacity, and sell a large portion of its stake in Mitsubishi Motors to save whatever it can.
These new measures seek to save the company about $3 billion, which it rapidly spent over the past six months.
“The question is how to do it fast and adapt to reality,” Uchida said at a news conference. “We cannot deny the fact that our sales plan was overstretched given the rapid changes in markets.”
Related: Why Nissan's future plans for its U.S. offerings is vital for its reputation
Nissan's Uchida makes changes to 'The Arc'
Back in March, the automaker unveiled a new business plan called 'The Arc,' which sought to introduce 30 new models, including 16 hybrid and electric cars to spark growth and replace its aging lineup.
Though the plan was intended to boost sales by a million units and refresh 78% of Nissan's model lineup in the U.S., Uchida is prioritizing what is important now.
“We have no choice but to partially revise the plan,” Uchida said. “It is my deepest regret to face this challenging situation in the initial year of The Arc.”
He seeks to cut the automaker's global capacity by 20 percent to achieve profitability, reflecting more realistic sales numbers. Though the CEO is reducing its output, Uchida says that Nissan won't adjust the 30 new models under its original plan but notes that market conditions could dictate when certain models launch.
Nissan delivers hard-luck news to workers
Its plans to reduce capacity include a 9,000-person reduction of its global headcount of over 133,000 employees.
At its news conference, Nissan's Chief Monozukuri Officer (Head of Manufacturing) Hideyuki Sakamoto said that the reduction in force will allow its factories to run more efficiently and save money.
“Globally, we currently have 25 vehicle production lines. Our current plan is to reduce the operational maximum capacity of these 25 lines by 20 percent,” Sakamoto said.
“One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel.”
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Nissan is loosening its grip on Mitsubishi
Part of the cost-cutting initiative is Nissan's reduction of its 34% share of fellow Japanese automaker Mitsubishi Motors.
Nissan will sell back roughly 149.03 million, or 10.02%, of its shares to Mitsubishi at a price of $3.24 per share, which should net around $482.7 million.
Though Nissan will remain Mitsubishi's largest shareholder, the company states that the sale of its partial stake will support Mitsubishi's shareholder value strategy and allow Nissan to explore additional "growth opportunities."
Related: Nissan is bidding farewell to fan-favorite model after 23 years
Nissan's bleak outlook
Nissan's fiscal year ends on March 31, 2025, but its sales and operating profit outlook has been cut to reflect uncertainty about the new moves it is implementing.
The company now projects that its operating profit will dramatically sink 74% to $1.05 billion. Back in July, it had already predicted an even more drastic profit cut from $4.01 billion to $3.5 billion.
On the sales front, Nissan predictions for its global sales have been cut by 1.2%. Its initial sales projection of 3.65 million cars dropped to just 3.44 million units in July, which is now reduced to just 3.4 million.
The projection reflects its expected sales volume to drop in its major markets, except North America. There, sales growth is expected to grow by 6.2%.
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