- Nissan has announced turnaround measures as merger talks with Honda end.
- Around $2.59 billion could be saved through layoffs and efficiency drives.
- Nissan will explore partnerships, but Foxconn would rather team-up than buy-in.
What next for Nissan? The Japanese automaker has been forced to cook up a turnaround plan B after merger talks with Honda broke down, and the new strategy involves cutting billions of dollars of cost out of the failing business and urgently looking for a new partner.
Nissan has targeted ¥400 billion ($2.59 bn) of savings during the 2026 fiscal year that it says will be achieved through headcount reductions and production efficiency measures. The drive became even more urgent today after Nissan downgraded its expected operating profit for 2024 from ¥150 bn ($970 m) to ¥120 bn ($780 m) due to slow sales, having already dropped it from ¥500 bn ($3.24 bn) in November.
Related: Honda-Nissan $60B Merger Officially Dead Over Control Issues, Mitsubishi Out Too
Three quarters ($1.94 bn) of the ¥400 bn savings will come from reducing fixed costs. Around 2,500 indirect jobs will go (but 1,000 will be created at shared service centers), and consolidating production lines at Smyrna and Canton in the US, and in Thailand will reduce staffing numbers by 6,500 over two years.
Other savings come from shortening the development time for new vehicles, while streamlining product lineups, making parts less complicated, and cutting supply chain inefficiencies should contribute ¥100 bn ($650 million). But Nissan knows it needs to do more than take money out of the business to secure its long-term survival when China’s auto industry is growing increasingly strong.
“It will still be difficult to survive without leaning on future partnerships,” CEO Makoto Uchida said to Bloomberg.
Nissan needs another tie-up along the lines of the one with Honda that fell through, and claims it will “conduct a strategic review to actively explore new partnerships.”
One company that has expressed an interest in working with Nissan is tech giant Foxconn. Taiwan-based Foxconn’s chairman, Young Liu, this week said it would be willing to invest in the automaker, but that wouldn’t be its first-choice option.
“If cooperation requires it, we will consider [purchasing Nissan shares],” Liu told Reuters. “But purchasing its shares is not our aim; our aim is cooperation,” he continued, adding that Foxconn was looking at working with Renault, Nissan’s biggest shareholder.