Nissan announced that profits had nearly vanished in the second fiscal quarter and that it will be forced to endure massive layoffs to turn the brand around.
Japanese carmaker Nissan announced on Thursday that they will be cutting 12,500 jobs globally amidst a rising crisis within the brand. Poor sales and rising development costs have virtually eliminated the company’s operating profits, forcing drastic action.
Profits were down 98.5% at the end of the first quarter of 2019 with just $14.8 million to show for their efforts.
As a result, Nissan will eliminate 12,500 jobs with most of those being in their manufacturing sector. Nissan CEO Hiroto Saikawa said that 6,400 jobs would be eliminated by the end of the current fiscal year, while the remaining 6,100 would be gone by the end of 2022. No regional breakdown of where those jobs would be lost was provided, but Saikawa did state those jobs would be concentrated in 8 locations.
According to the Associated Press, Nissan had 138,000 total workers as of March of 2018.
North America is a key battleground region for Nissan where they’ve been losing market share for years. In order to retain that share, the company adopted a policy of aggressive discounts to incentivize buyers. This plan had the unfortunate side effect of cheapening the brand’s image and harming their car’s resale value.
Worse, many of Nissan’s vehicles are reaching an advanced age and are due for replacement. The Nissan Frontier mid-size pickup and 370Z sports car are two examples that have been on the road in their current form for over a decade.
Further complicating matters is the strained relationship between Nissan and Renault ever since the failed merger with Fiat Chrysler. Many within Renault blame Nissan’s reluctance to provide their blessing for scrapping merger talks with FCA, which has lead to a decrease in collaboration between the two companies and will surely lead to an increase in new vehicle development costs.