Nissan is facing a precarious financial situation, with reports indicating that the company has ’12 or 14 months to survive.’ The urgency comes as Nissan seeks a stable long-term shareholder amidst the Alliance partner Renault’s plans to reduce its stake in the company. A senior official has highlighted this dire need for financial support, suggesting that the company may consider inviting Honda to purchase shares to bolster its financial standing.
Renault has already decreased its stake in Nissan from 43.4% to below 36%, while maintaining a 15% voting stake. The French automaker is expected to continue this trend of gradually reducing its stake. In tandem, Nissan is also adjusting its own stake in Mitsubishi, from 34% down to 24%. The automotive giant is in a tough spot, particularly as sales have dipped in both the US and Chinese markets.
To combat these challenges, Nissan is planning to ramp up the introduction of new energy vehicles, including hybrids and electric models, particularly focusing on the Chinese market. Additionally, the company announced a significant reduction in global production capacity by 20% and intends to cut around 9,000 jobs to stabilize its operations. This restructuring comes after Nissan reported a staggering drop in operating profit for the first half of the fiscal year, plummeting from 303.8 billion yen to just 32.9 billion yen.
Nissan’s CEO, Makoto Uchida, has stated that these measures will not result in a shrinking of the company but rather a leaner and more resilient organization. Along with these operational changes, Uchida will voluntarily forfeit half of his monthly compensation, joining other executives in taking a pay cut to alleviate financial strain.
Despite these setbacks, Nissan is committed to maintaining its collaboration with Renault and has recently forged a partnership with Honda. This agreement aims to explore new avenues for electrification and the sharing of vehicle platforms, creating potential synergies between the two brands. The partnership could encompass both electric and combustion vehicles, as well as a next-generation software-defined vehicle platform.
Japan’s Ministry of Economy, Trade, and Industry has long hoped for a merger or closer partnership between Nissan and Honda, but Honda’s desire for independence and Renault’s influence over Nissan have thus far inhibited such a move. The relationship between Renault and Nissan has been fraught with tension since the formation of their Alliance in 1999, particularly following the tumultuous exit of former CEO Carlos Ghosn in 2018. As these automakers navigate the complexities of their partnerships, the future remains uncertain, with Nissan’s ability to stabilize its financial situation hanging in the balance.
