Nissan is reportedly in a precarious financial position, with reports indicating the company has ’12 or 14 months to survive’ unless it secures a stable long-term shareholder. The urgency comes as its alliance partner, Renault, moves to lower its stake in the Japanese automaker. A senior Nissan official expressed the need for immediate action, suggesting that partnerships may play a crucial role in the company’s survival.
With Honda recently announcing a partnership with Nissan, there are discussions about Honda possibly purchasing shares from Nissan to strengthen ties between the two companies. This comes on the heels of Renault reducing its stake in Nissan from 43.4% to below 36%, while maintaining a 15% voting share.
As Nissan grapples with declining sales, especially in vital markets like the US and China, it is making significant operational adjustments. The company has announced plans to cut global production capacity by 20% and eliminate 9,000 jobs to stabilize its business after reporting a substantial drop in operating profit. During the first half of the Japanese fiscal year 2024, Nissan’s operating profit fell drastically, leading to an operating profit margin of only 0.5%.
Nissan’s CEO, Makoto Uchida, has emphasized that the restructuring efforts are not indicative of the company shrinking but rather a move towards becoming leaner and more resilient. As part of cost-cutting measures, Uchida has also decided to forfeit 50% of his monthly salary, aligning with other executives who will also take pay cuts.
The company is not only focusing on immediate financial recovery but is also planning for the future by advancing the introduction of new energy vehicles in China and the US. This includes hybrids and electric vehicles to adapt to the evolving market demands.
In August, Nissan signed a memorandum of understanding with Honda and Mitsubishi, aiming to collaborate on the development of next-generation electrification technologies. The partnership will explore platform-sharing and the development of a software-defined vehicle platform, as well as the sharing of electric motors and inverters.
Despite these efforts, tensions between Nissan and Renault persist. The longstanding alliance, formed in 1999, has faced challenges, particularly following the controversial termination of former Nissan CEO Carlos Ghosn. As Nissan moves forward, balancing its relationships with both Renault and Honda will be crucial for its survival in the competitive automotive landscape.
