Nissan Motor Company plans to become a much smaller company in the near future. This directive from the company’s management team comes amid a global pandemic that has accelerated the need for the automaker to downsize and refocus on its profit margins.
The Japanese automaker was struggling prior to the pandemic outbreak, stifled by slumping sales and a scandal surrounding former chairman and CEO Carlos Ghosn. Ghosn was also notorious for having lofty growth plans for the company, something Nissan management has had to reign in since his ouster.
As the company has dialed back growth plans, Nissan already trimmed its global workforce by 10 percent before the pandemic. This initial downsizing reflected the delta between Ghosn’s desire for the automaker to sell 8-9 million vehicles a year and the reality that Nissan has struggled to sell more than 5 million units per year. A reality solidified last July when then-CEO Hiroto Saikawa set a global sales target of 6.5 million units for the company, down from the previous lofty figures.
According to Reuters, sources say Nissan CEO Makoto Uchida and team are currently developing a new plan for the company that may move its sales target to 5 million per year. One source says the final number may come in under 5 million as Uchida is seeking a realistic roadmap.
The new plan is slated to carry the company through March 2023, with the end of the plan calling for a return to 5 million units per year after dipping due to the pandemic. These figures would represent a substantial downsizing of Nissan’s operations, including its global manufacturing footprint. Such a downsizing could lead Nissan to shudder three or four assembly plants and reduce its workforce even further.
Sources close to the planning process are also saying Uchida is going to focus in on operating profit margin, which has been a pain point for Nissan in recent quarters. The target margin is supposedly 6 percent in the plan, which is still lower than global rivals prior to the pandemic.
Nissan is expected to formally announce its plans in May.