Big trouble for Nissan

Nissan, the Japanese automaker, is reportedly facing a grim financial crisis that could threaten its very survival.

According to insider reports shared with the Financial Times, the company may have as little as 12 to 14 months to turn its fortunes around.

This revelation, attributed to unnamed senior executives, has cast a shadow over the company’s future, including its operations in South Africa.

Nissan has struggled with declining profitability and a shrinking market share in key regions. The company has been selling some models at a loss, and job cuts have become increasingly frequent.

In early November, Nissan announced a plan to eliminate 9,000 positions deemed redundant, reduce its global production capacity by 20%, and revise its profit forecasts for the financial year.

These measures come on the heels of a dismal financial performance in the first half of 2024, where operating profit plummeted by 303.8 billion yen (R34.9 billion), leaving the company with a modest 32.9 billion yen (R3.7 billion) in earnings.

To signal the gravity of the situation, Nissan’s senior executives, including CEO Makoto Uchida, have voluntarily taken a 50% salary cut.

Despite these efforts, the road to recovery remains uncertain.

Complicating matters further is the declining support from Renault, Nissan’s long-time alliance partner.

Renault reduced its stake in Nissan from 43.4% to 36% in 2023, and Nissan is set to lower its shareholding in Mitsubishi, another alliance partner, from 34% to 24%.

These moves are part of a broader emergency turnaround plan but have left Nissan scrambling to find a new long-term investor, potentially from the financial sector.

Amidst this turmoil, Nissan is exploring new partnerships to secure its future.

A potential collaboration with Honda is on the horizon, with the two Japanese automakers reportedly working on a memorandum of understanding to jointly develop electric vehicles.

Such a partnership could help Nissan regain a competitive edge, particularly in critical markets like China.

Renault may also facilitate this alliance by selling some of its remaining shares in Nissan directly to Honda.

This move could benefit all parties, consolidating a Honda-Nissan relationship while allowing Renault to refocus its resources.

Despite these global challenges, it is still unclear how this crisis might impact Nissan’s South African operations.

The company has a manufacturing facility in Rosslyn, Pretoria, which produces the Navara bakkie for local and export markets.

However, South African consumers have already seen some fallout, with models like the Qashqai and NP200 being discontinued.

Nissan has stated that it plans to launch new vehicles globally, including at least 17 models targeting diverse regions such as Europe, Oceania, the Middle East, and Africa.

If the company can navigate its current crisis, South Africa is expected to receive updates to existing models like the Magnite, X-Trail, Patrol, and Navara and the introduction of two new SUVs.

Globally, Nissan’s production figures reflect the mounting pressure.

In October, the automaker’s monthly output fell by 6.3% to 290,848 units.

Production in key markets like the United States and China saw sharper declines of 15%, underscoring the challenges the company faces in maintaining competitiveness.

For South Africans, the possibility of Nissan exiting the market raises questions about the future of its local manufacturing presence and the availability of its popular vehicles.

While Nissan has outlined ambitious plans to revitalise its portfolio, the next 12 to 14 months will be critical.

Whether these efforts will be enough to keep the company afloat remains to be seen, but for now, the uncertainty surrounding Nissan’s future serves as a sobering reminder of the challenges facing even the most established automakers.

Nissan has not issued a detailed public statement specifically addressing the Financial Times report.

However, in response to a request for comment by Carscoops.com, a Nissan spokesperson declined to comment on the report but reiterated that the company is in “emergency mode,” focusing on restructuring efforts.

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