By on July 25, 2019

On Wednesday, we reported Nissan was preparing a financial report that was presumed to involve quarterly profit falling by around 90 percent — necessitating roughly 10,000 job cuts. At the time, Nissan gave some vague confirmation that the estimates were accurate while halfheartedly attempting to refute them.

However, when the official numbers came out on Thursday, the reality was worse than initially assumed. Nissan reported an almost 99-percent drop in operating profit in the latest quarter, citing falling sales in every major market except China. Rather than 10,000 job cuts, it’ll require 12,500. 

From Nissan:

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 [percent] 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 [percent] 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.

During the announcement’s press conference, CEO Hiroto Saikawa admitted the results were worse than expected but reminded the media that the company’s restructuring efforts were already underway. Of the 12,500 job cuts, 4,800 had already been announced earlier in the year.

An estimated 6,400 of the total staffing reductions are to commence immediately. Roughly 1,500 will take place in the United States, with another 1,000 in Mexico and 830 in Japan. The rest are spread out between the United Kingdom, Spain, Indonesia, and India.

Those reductions are supposed to be finalized before April of 2020. Saikawa said to expect the remaining layoffs to wrap in 2023. Details on those were scant, however.

Nissan’s net income dropped 95 percent to 6.4 billion yen ($59.3 million) during the last quarter. Revenue slid 13 percent to 2.37 trillion yen ($21.97 billion) in the three months ending in June, with global retail volume declining by 6.0 percent. The automaker addressed the generally negative trend within the industry claiming it’s own 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.”

Its current goals involve improving capacity utilization worldwide and weening itself off fleet sales and heavy incentive spending in the United States. Saikawa said it would take some time for the changes to take effect.

 

[Image: Anton Watman/Shutterstock]

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45 Comments on “Nissan’s Financial Report Worse Than Expected...”


  • avatar
    civicjohn

    I maintain they should just buy Enterprise, play the autonomous driving card (“coming next year”), and they’d wipe up all that excess inventory in the US.

  • avatar
    SCE to AUX

    I guess they’re not actually losing money yet, so it’s not all bad.

  • avatar
    3800FAN

    Anyone here buy or consider buying a nissan recently?

    I considered a 2012 maxima cuz I loved the styling and performance…I’m not a cvt hater…but didn’t cuz it was cramped. Got an accord v6 instead.

    • 0 avatar
      ToolGuy

      “Cramped”? It’s a feature:
      https://tinyurl.com/yxohhc9a

    • 0 avatar
      SCE to AUX

      I came within minutes of buying a Kicks last October (to replace my 13 Optima Hybrid), but the trade-in evaluator had left for the evening. So I left the store, and 10 days later I got a Hyundai Ioniq EV as an additional car, and kept the Kia.

      I really liked the Kicks, and the CVT wasn’t bad. It’s still on my list of candidates.

      Interestingly, this was a store that *really* turned me off in 2013 when I took my son car shopping (we played the 4-square game for 2 hours), but I wanted to give them a second chance lately. They did well this time. Back then, my son ended up getting a used Sonata somewhere else.

    • 0 avatar
      roloboto

      I bought a gently used (24000km) Frontier last year. I like it. Great truck.

    • 0 avatar
      thegamper

      I leased a 2011 Nissan Maxima and previously a 2007 Nissan Pathfinder (the 4.0 body on frame version) and had zero issues with either. Both of them were what I would consider excellent deals that I felt I had to jump on. The Maxima was a really nice ride and to this day I would consider it a lot of car for the money. The Pathfinder had a pretty poor quality interior, it was even the top trim as I recall, but enjoyed the vehicle overall. I wouldn’t have any problem buying a Nissan. Everyone hates on them on TTAC….and maybe other sites as well, but I am not a brand snob and will buy whatever I want especially if the price is right. Most of the people hating on Nissan probably have a vehicle that would incite heavy criticism among this crowd.

      Seems here that most of hate is because it would hurt people’s ego too much to be seen in something someone with a lower credit score could drive home. Not really a reason to avoid a car unless you are really that shallow. To be fair, we all know that people with poor credit scores can get into any vehicle they want if they sign on the dotted line, they just may have to pay more. Its a very poor indicator of social status. But you guys know that right, cuz you are the best and brightest I’m told.

      • 0 avatar
        3800FAN

        I would consider a used nissan but never a new one. Their resale value is just too poor vs the product you’re getting. However go look at a 2017 pathfinder vs a 2017 pilot and you’re gonna pay 8 grand less for the Nissan. That’s great if you’re buying used but unless I was gonna keep it forever I wouldn’t buy new cuz the resale value would be too low.

        • 0 avatar
          Robotdawn

          This logic kept me (mostly) in GM cars through the lean years. Honda Civic for 20k or a Olds Alero for 12k. Not a tough choice when you don’t keep cars more than 70-80k miles.
          My mother has either driven Buicks or Nissans/Datsuns since around 1980 and considers them on par with each other. I don’t, but I’m not the driver.

    • 0 avatar
      SCE to AUX

      Not so recent, but I’ve discussed my 12 Leaf extensively here before.

      Aside from the degrading battery and clueless dealer support for the car, it was an excellent vehicle. It taught me a lot about EV ownership.

      Despite their pioneering work in EVs (in this century, anyway), Nissan keeps an arms-length relationship with the Leaf because it turns out that they’re not “all in”.

      The Leaf is likely a part of Nissan’s financial woes.

  • avatar
    threeer

    After spending a few days in a top-spec Murano, I am not surprised. Cheap at half the price, the doors were flimsy at best and the interior trim was laughably brittle.

  • avatar
    jalop1991

    Will this be the rise of the BHPH new car business??

  • avatar
    87 Morgan

    Something about this situation over at Nissan stinks, and reeks of Bernie Madoff or Enron accounting shenanigans. How can profit drop 95% to $59.3 million last quarter, or $20M a month from the previous quarter? Sales have not dropped that much, at this point I strenuously question the validity of their financial reporting for 2018 and years earlier. Nissan’s discounting and cash on the hood is not a new phenomenon by any stretch.

    • 0 avatar
      SCE to AUX

      “https://www.youtube.com/watch?v=bOnRHAyXqYY”

      :)

    • 0 avatar
      ToolGuy

      87 Morgan,

      Automakers tend to have relatively high fixed costs. “Profit” is all-in, including amortization of fixed costs. So it doesn’t take a 95% drop in Revenue to give you a 95% drop in profit. Remember that a good automaker in a good year might have profit margins of 6-8-10%. You can wipe out that margin pretty quickly with any significant decline in Revenue.

    • 0 avatar
      Robotdawn

      It’s not shenanigans, it’s just the way things are done. I would guess the new CEO is using the Ghosn opportunity to take every hit they possibly can right now while they can still blame Ghosn. Next year when all the hits are behind them, they can credit the new Japanese management for the turnaround.
      This game is played at every company in every business.
      The loss also gives them a reason to take an axe to the fat they’ve accumulated while they were making good money. Companies that don’t do this periodically WILL go bankrupt (like our governments would if they couldn’t just raise taxes forever).

  • avatar

    So the only thing keeping them out of Chapter 11 all these years was a leadership of C? If Carlos Ghosn was dead he would be rolling in his grave now.

    • 0 avatar
      bd2

      More like the after-effects of years of “Le Cost Cutter.”

      Similarly, Mulally was lauded for his “leadership” at Ford, but his similar cost-cutting management led to Ford’s reliability rankings tanking w/ all those faulty transmissions and poor quality launches of new models.

      • 0 avatar
        ToddAtlasF1

        The problem with your faulty theory is that Carlos Ghosn pulled them out of insolvency. Had he been in the problem creating business, they’d have folded long ago.

        • 0 avatar
          bd2

          Who doesn’t know that (at least those who follow the auto industry closely)?

          Cost cutting is the EASY part – the corporate world is littered w/ former execs who could do the cost-cutting (doesn’t take extraordinary talent or skill to fire a lot of people and close down divisions, factories, etc.) but couldn’t do what was required after.

          Once the blood-letting has taken place, the next step is to make prudent INVESTMENTS to grow the company back to growth and more importantly, profitability.

          Ghosn starved and cheapened Nissan and Infiniti and chased sales volume via massive discounts and fleet sales.

          The Rogue and Pathfinder should have been replaced by now and the current Murano (which went into production) is adequate at best.

          Aside from the Maxima (which gets praise from the auto pubs for its sportier handling – than something like the Avalon), there isn’t one Nissan model that is considered to be a class leader (top 1-2 within its segment).

          Ghosn also pushed Infiniti into that failed venture w/ Daimler (using MB platforms and powerplants) – which ultimately resulted in Infiniti pulling out of the EU market.

          Much of the troubles maligning Nissan today is directly due to Ghosn’s “leadership,”

  • avatar
    JoeBrick

    That sounds like a mighty big drop in revenue to me. If I was a betting man, I would put my money on Nissan being only a memory within 5 years.

    • 0 avatar
      geozinger

      Not likely. I would hazard a guess that Toyota would snap up the remains. They seem to be acquiring/gaining shares in former competitors at a pretty decent clip in the last several years.

      At a minimum the Japanese government will step in find a merger partner (within Japan) to keep them afloat.

  • avatar
    redgolf

    After talking to an insider friend of mine last night who works at the Smyrna, Tn plant, not any word on reductions there, however he stated that there weren’t too many full scale workers left in the plant anymore since most left in previous buy outs, so any reduction in man power would be with the temps that they have working there and there are plenty of them.I hate to see anyone loose there job, been there done that!

  • avatar
    iNeon

    Is this where we’re allowed to talk about unions, and about how a unionized workforce might be protected in exactly this situation— at any automaker?

    This sucks for everyone at Nissan— the most pain will be felt at the bottom rungs. An inverted pair of pyramids are how I visualize the profits vs. liabilities in this particular circumstance— a union might negotiate *any* means of subsistence for the workers if a company like this goes insolvent.

    It isn’t only the customer-base that are vulnerable to this financial shell game- the workers are always left under-represented come time for executives to bail.

    I guess the Euros/FCA were left cold because Japan intend to nationalize Nissan?

    • 0 avatar
      ToddAtlasF1

      You do know that the vast majority of unionized auto workers in North America have already lost their jobs, right? What are they teaching the kids these days?

      • 0 avatar
        thegamper

        I think it is pretty rare that UAW workers actually “lose their jobs” the way most in the workforce would. It typically involves buyouts, early pension availability, offers to move to different plants. You just cant fire UAW workers without some sort of golden parachute. That’s not to say that all of the “downsized” union workers are better off without their jobs, but if I got fired it would be a door slamming behind me and nothing more. Quite a different experience from the UAW worker.

        • 0 avatar
          ToddAtlasF1

          https://www.detroitnews.com/story/business/autos/2019/03/29/uaw-membership-dropped-last-year/3314861002/

          UAW lost 35,000 members in 2018. If anything, ‘golden parachutes’ for labor are far worse than nothing, as they end up sitting around for the rest of their lives with their hands out instead of seeking new employment.

    • 0 avatar
      SCE to AUX

      The only protection the UAW can offer its workers is better terms for their separation when the reductions come.

      The mfrs aren’t in the charity business, so guaranteed job retention is a foolish dream.

      • 0 avatar
        iNeon

        I’m not sure guaranteed job-retention was my logic. That seems to be imagined. Never proposed wage/labor work in 2019 resembles a Jacob Riis exposé, either. (That’s the part about this I was taught at school)

        This dialogue broke down so quickly!

        I was kind of thinking of the wage workers in Tennessee who are probably competing for the 8 jobs at their local Chevron/Dollar General right now— while they’re also trying to abide throwing together door panels 13 hours a week indefinitely— because that ‘good’ job might return to full-time scheduling sometime in the future.

        We’ve an extant public safety-net— but why shouldn’t there be both private and public protections, paid by the individual? I feel like double-redundancy (urbane: back-up plan to the back-up plan) is best when we’re discussing the potential for a group of human-beings to remain most self-sufficient in changing environments.

        Signed— A USW-funded Liberal Arts Degree named Dustin.

  • avatar
    sportyaccordy

    The good thing to me is Nissan’s path forward seems pretty obvious… or to put it another way, they have some pretty glaring issues to address. The lineup is absolutely ancient almost across the board. Whatever is not worth updating probably has to die. The JATCO relationship also needs to end. And Infiniti needs to do the same as well as re-establish its identity.

    The only real question is whether or not they have the capital (or credit rating) and runway to execute. To be completely blunt though Nissan has been a second bit player lurching from crisis to crisis with brief contrasting moments of greatness. With the heightened demand and scrutiny on corporations stemming from this extended low interest rate environment they can’t hide under the radar like before.

    • 0 avatar
      dtremit

      JATCO is something like 75% owned by Nissan, so I doubt they’re going anywhere.

      Having flashbacks now to avoiding attractive ’04 Mazda6 offers because it had a JATCO 5-speed auto. Mazda ditched them for an Aisin 6-speed in ’05 due to reliability issues.

  • avatar
    ravenuer

    I guess it’s the area of the country you’re in, but where I live, Long Island NY, pretty much every other car on the road is either a Murano, Rogue or an Altima.

    • 0 avatar
      theflyersfan

      I thought I’d see more new Altimas on the road by now, but like you, I see Rogues everywhere. But I do wonder how many are fleet vehicles (I see a lot of white Sentras and Rogues with Maryland tags and bar codes on windows) and not actual sales. The Kicks also seems to be increasing in number. I don’t think Nissan has a severe problem actually moving the metal, it’s who they are moving the metal to and how they are doing it. If it’s just dumping cars into fleets and discounting Altimas and Maximas with $4-5K on the hood, that explains how the factory stays running, but profit drops to almost zilch.

      This is just a guess (can’t stress that enough) but given that you mention Long Island with major airports nearby, and a lot of tourists and car rental companies, I’m betting that many of those Nissans have renter agreements in the glovebox.

      • 0 avatar
        dtremit

        A lot are also probably leases — you can lease one of those for next to nothing. Local dealers here are running 36 month leases on Rogues for “$139/mo” with $3k down.

        The Rogue isn’t an exciting car by any stretch, but it’s a damn practical vehicle for $225 a month.

        • 0 avatar
          Ryan

          dtremit,

          I agree. I had a Rogue for a week over the 4th of July holiday. Nothing overly impressive but for $225 a month, or even better lease numbers – it’s hard to find something more or equally practical for the price.

          I’ve never owned a Nissan product but I would not be apposed to it.

          • 0 avatar
            Dave M.

            There are a few Nissans I’d certainly consider – the Leaf, Rogue, Rogue Sport, and Armada. I’ve spent time in each and remain impressed, especially when you can get 20-30% off.

  • avatar
    theflyersfan

    Nissan is a living, breathing identity crisis. Those of us over a certain age (over, say 35), fondly remember class-leading and exciting vehicles like the 1990 300ZX Twin Turbo, 240SX, Sentra SE-R, 4DSC Maxima (especially the SE), real BoF Pathfinder and Hardbody, and even how different and well built (except the always dying taillights) first-gen Altima and the quirky yet fun NX2000.

    And then due to the bubble popping, poor management, and just some poor decisions, drivers today who don’t remember or never knew the Nissan of the early 1990s now see Nissan as appliances. Yes they have the GT-R and 370ZX, but those have been left on the vine so long, they are now shells of what they were and everyone else has left them by. Can anyone look at the soulless, blob-shaped Pathfinder of today and say that is what the Pathfinder stood for? At least the 4Runner has kept some semblance of what it is supposed to be. Is the Rogue nothing but a place in a lineup – a generic transportation device meant to capture buyers at a price point, but not keep them as future buyers of Nissan products? What has the Maxima and Altima become? Nissan has tried so hard to convince us that a CVT-driven Maxima powered by a form of an engine been around since Lord knows when is supposed to remind us of that German-looking, taut, stick-shift driven Maximas of the 1990s. And the Altima went from a style-driven first generation to another appliance on the road with each newer model. And don’t get me started on the death roll of the Sentra…

    We can blame CVTs (and that is a huge part of the problem as they tend to suck any kind of driving involvement out of the picture), less than credit-worthy buyers/leasers, poor leadership, or any other excuse that has been posted on this and other boards. But in my mind, it all boils down to that Nissan needs their identity back. Even staid Toyota is trying with the Supra and now advertising a stick in the new Corolla. What does Nissan stand for? Ken and Barbie in a 300ZX TT? Dogs love Trucks? All ads over 20 years old now. What do they currently have?

    I loved Nissan. I’ve owned three. For over a decade, we as an extended family had 6-7 Nissans and Infinitis. Now we are down to one Infiniti – a G37 that is still at its core, a driver’s car. But, with the exception of an amazing deal on a GT-R (which will never happen), I cannot see myself in any Nissan or Infiniti product because they just don’t stir the soul like they used to.

    You fix the product, you fix the problem. Just don’t design a vehicle to dump into fleets (…ahem…Sentra). Give us a taste of the old Nissan – the one that took the fight to the Europeans at a Japanese price with excellent quality. Then I will start looking at a Nissan or Infiniti again.

    (…rant over…)

    • 0 avatar
      3800FAN

      Great rant. I grew up in the 90s and mostly agree but we forget how nissan woulduv gone belly up in the late 90s if it wasnt for Renault. NISSANS product line had become boring and overlooked. Remember how boring and tiny the gen 2 Altima was? The Infiniti i30 which was a rebadged maxima? It was pathetic! Then came Renault and Carlos Goshen who gave nissan the capital and brainpower they needed to make awesome rebound products like the 2002 Altima which set off a horsepower war in the midsize sedan segment and the G35 which did the same for a luxury sports sedan. Then the problem came when Carlos became obsessed with marketshare and cost cutting and those made nissan the Pontiac of the decade and Infiniti hasn’t been able to keep up with the Japanese or German competition. I think Nissan needs to divorce themselves from Renault going forward but I don’t really see that happening.

  • avatar
    schmitt trigger

    Excellent rant, spot on.

    Unfortunately, designing a new platform that would fulfill your “soul” requirements takes many years and billions of money. Does Nissan have either one?

    • 0 avatar
      theflyersfan

      No, unfortunately they don’t and today’s auto climate and budgets won’t allow the freedom and flexibility that the engineers had 25 years ago. Does anyone think that a company as small as Mazda could get the MX-5 off of the ground (as a solo project) in 2019 – a dedicated RWD platform that would only sell a few thousand cars a year? Nope. No chance. It would take a sharing of the minds and dollars like BMW/Toyota and Subaru/Toyota to get something that niche off of the ground.
      And that’s where Nissan is stuck. Renault doesn’t have the performance RWD platform that other European players have. I wish they would loosen the grips on the Megane platform and let Nissan have a go at redoing their small cars with that. Imagine a new Sentra SE-R vs. Civic Type-R battle there!
      If memory serves me well, Renault is just “kind of there” in the European car market. Kind of like Nissan is with the Japanese car market.
      So, I think Nissan needs to take some baby steps to get its image back. Pry that RWD/AWD platform from Infiniti and make that the new Maxima. The Altima has been stepping on the Maxima’s toes for almost two decades now and the Maxima has suffered greatly. Bring back the Xterra. Toyota showed with the FJ Cruiser and Jeep shows every day there is a market for a true hard-core 4WD off-road vehicle that looks that part. The Versa and Sentra are too much alike and way too bland. Nix one, and make a performance model of the survivor. Making the Altima with an AWD option was genius – now give us a hybrid version when gas prices decide to go up again. Crossovers sell, so we all know that the Rogue, Murano, and Pathfinder (sigh) are untouchable. The Armada probably prints money at this point given the age and sunk costs. The Frontier is getting redone soon – that would be the time to show a new Xterra as well. Work with a partner to bring a new, modern Z car to us. Mazda perhaps? They have experience with that. And sort out the GT-R. It is a track beast. It puts up stunning numbers. But this generation is at least 11 years old. Yes, it has a redone interior, but the guts of it are still the same obese, creaky bones from a generation ago. But that engine…

      And invest in a new transmission. The CVT reputation is garbage at this point. 8 to 10 speeds is the sweet spot now.

      I’m a little passionate about Nissan given my family’s history (and love) of past ones…

  • avatar
    3800FAN

    I’ve test driven many nissans and have never purchased one because every one of them had a glaring flaw that turned me off.

    89 240sx. The 12 valve i4 drove like a truck engine which in fact it was. Not a fun engine to have in a sports car.
    95 maxima 5 speed; I literally could not fit in it and operate the clutch. It was very awkwardly proportioned inside.
    2002 maxima- the solid beam rear axle made it ride like my old achieva…smashy crashy ride. No thanks
    04 maxima- cheap plastic interior that made a grand am feel quality
    07 Altima- tinny feel and tinny ride
    08 rouge- rough crashy ride again
    2016 rouge- slow

    So that’s it. I’ve just found their products cheap feeling or oddly proportioned to being 6′ 2″ or just a bad ride. I don’t hate them though and still consider their products when I car shop but I’ve yet to find a Nissan that beats the competition for my needs.

  • avatar
    ravenuer

    Hands down, the best car I’ve ever owned was a 1996 Maxima GXE. It was fast, quiet, handled decent, good gas mileage, comfortable. Not to mention dead-reliable. Put 300k on it when the tinworm got the radiator support and I figured it didn’t owe me a cent.

  • avatar
    redgolf

    No layoffs at the Nissan plant here in Smyrna, Tn.


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