Credit Firms Slash Nissan’s Rating To Junk, One After Another

The potential merger between Nissan and Honda could have been a lifeline for Nissan, a chance to turn things around. But talks between the two carmakers broke down, and Nissan is once again left to face the music on its own. And things are looking increasingly grim as concerns about the company’s financial health have only grown, including from a leading credit rating agency that downgraded Nissan to junk status.

Read: Nissan To End Honda Merger Talks, Foxconn Back On The Table

Earlier this week, Fitch Ratings downgraded Nissan from an unsecured rating of BBB- to BB+, noting that it has a “negative” outlook and has “persistently low profitability with a delayed recovery trajectory.” Profits, or lack thereof, are the center of the concerns about the Japanese brand and its long-term future.

Nissan’s Long Road to Recovery

Fitch expects Nissan’s profitability to remain “pressured” over the next year or two and remains uncertain about the company’s restructuring efforts. Nissan has confirmed plans to cut 9,000 jobs globally and intends to reduce its total output by 20% due to slow sales. Analysts expect these efforts to help Nissan in its path to profitability, but they may not be felt until the second half of the 2026 financial year.

Meanwhile, potential US tariffs loom on the horizon, adding another layer of uncertainty. Nissan manufactures several models in Mexico, and for the fiscal year ending in 2024, around 300,000 of its Mexican-built vehicles were slated for export to America. Any increase in tariffs would raise costs across the supply chain and squeeze revenue even further.

The China Problem

If that weren’t enough, Nissan is facing trouble in one of its largest markets—China. Sales in the region dropped by 24% in 2023 and are expected to stay flat in 2024. This is particularly worrying given that China accounts for nearly a quarter of all Nissan’s new vehicle sales.

“The downgrade reflects Nissan’s persistently low profitability, with a delayed recovery trajectory against our expectations,” Fitch said. “We forecast that auto EBIT and free cash flow (FCF) will remain negative until the financial year ending March 2026 (FYE26), below our negative rating sensitivities. However, Nissan’s strong liquidity and solid balance sheet buffer against near-term cash outflow.”

As if the Fitch downgrade wasn’t enough, Moody’s also downgraded Nissan’s debt to junk status last week, assigning it a Ba1 rating. With two major financial agencies voicing their concerns, Nissan’s future is looking increasingly uncertain, despite its strong liquidity and solid balance sheet.