Nissan has reportedly ordered a series of drastic spending cuts to deal with declining sales and decreasing profit margins.
Quoting three anonymous company sources with knowledge of the matter, Reuters reports that the Japanese car maker is slashing non-essential spending, including unnecessary travel, sales incentives and promotional events.
This move comes in an attempt to correct the company’s financial results for the rest of the business year until the end of March, but will most likely be retained for the following year as well, the sources said.
Related: Nissan’s New Boss Doesn’t Want Closer Ties With Renault At The Moment
Meetings that would include three or four people having to travel to attend in person will now only have only one representative while other gatherings and dinners are canceled altogether or replaced by video-conferencing. As one of the sources put it, Nissan has to “conserve every yen”.
The spending cuts come in addition to Nissan’s decision for a two-day furlough for US employees on January 2 to 3, as well as a travel ban for staff in the country.
Nissan isn’t lacking cash flow at the moment but its latest actions reveal the size of the crisis within the company; last April they announced a major plan to boost sales numbers and profit margins but the outlook has worsened more than anticipated since then. Second-quarter operating profits were down by 70 percent, prompting Nissan to cut its full-year predictions to an 11-year low.
Another source confirmed that Nissan has currently plenty of cash, as well as good credit lines; these include money from the company’s operations in China, following years of accumulated profits from the company’s Chinese joint-venture operations.
Nissan saw its vice chief operating officer -and one of the contenders for the CEO position– Jun Seki resigning his post to become the new president of Nidec Corporation, a Japanese manufacturer of electric motors.
