Nissan is navigating a turbulent financial landscape, reminiscent of its challenges in the 1990s. Recent reports from The Financial Times reveal that the automaker is in urgent need of a long-term, stable shareholder, as its alliance partner, Renault, plans to reduce its stake in the company. A senior Nissan official indicated that the company has ’12 or 14 months to survive’ without significant changes.
In light of this, Nissan is considering potential partnerships, including possibly selling shares to Honda, with which it announced a partnership earlier this year. Renault has already decreased its stake in Nissan from 43.4% to below 36%, while retaining a 15% voting power. The French carmaker has expressed intentions to continue reducing its involvement with Nissan.
Amidst declining sales in the crucial U.S. market and challenges in China, Nissan is pivoting towards new energy vehicles, planning to accelerate the introduction of hybrids and electric models. Recently, the company announced a significant reduction in global production capacity by 20%, resulting in the layoff of 9,000 employees as part of its strategy to stabilize operations, following a sharp decline in operating profit. The figures show a staggering drop from 303.8 billion yen (~A$3 billion) to 32.9 billion yen (~A$334 million), marking an operating profit margin of just 0.5%.
CEO Makoto Uchida emphasized that these restructuring efforts are not indicative of a shrinking company; rather, Nissan aims to become leaner and more resilient. In a show of solidarity, Uchida has decided to forfeit 50% of his salary, a move mirrored by other executives.
Despite ongoing tensions with Renault, Nissan is also looking towards collaboration with Honda as both companies explore opportunities in electric vehicle development and platform sharing. This partnership may lead to new synergies and shared technologies, including next-generation software-defined vehicles.
The longstanding relationship between Renault and Nissan, established in 1999, has been fraught with challenges, especially following the controversial departure of former CEO Carlos Ghosn. As Nissan seeks to navigate these turbulent waters, its focus remains on generating cash flow from its operations in Japan and the U.S., which are critical for its survival in the near future.
