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Nissan plans more cuts to production, model range – report

Overseas reports claim Nissan is making aggressive cuts to plans made under former CEO and now fugitive Carlos Ghosn.


A report from news agency Reuters claims that, in an aim to add 480 billion yen (A$6.55 billion) to the company’s bottom line by March 2023, Nissan is going to cut its global product range down to 62 vehicles by the end of 2022.

Slower-selling and less profitable options and trims will also be removed from remaining products.

In 2018, Nissan recorded 5.2 million sales globally and offered 69 models across the Nissan, Infiniti and Datsun brands.

It was targeting 5.5 million sales in 2020 – a goal it’s reportedly unlikely to meet – and Ghosn’s plans were to increase the global range to 73 vehicles by 2022.

The report from Reuters says A$2.45 billion of the A$6.55 billion Nissan is hoping to save would come from an array of cars Nissan was planning to launch over the next three years.

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While that could mean planned product will be scrapped, Nissan – under new CEO Makoto Uchida (above) – is also planning to speed up new product development and cut the average age of models to 2.5 years.

The average age of vehicles in Nissan’s range is currently five years.

One source close to Nissan’s senior management and board told Reuters, “The situation is dire. It’s do or die.”

In addition to product cuts, Nissan is planning to close two factories and eliminate at least 4,300 white-collar jobs.

Many of these jobs are expected to be sales and marketing staff based in the company’s US and European offices.

These cuts are in addition to those revealed last July, when Nissan confirmed it was cutting 12,500 jobs from its global workforce and reducing both its model range and global production capacity by 10 per cent by 2022.

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Under Ghosn, Nissan was aggressively targeting markets like India, Russia and Indonesia, three markets where the company introduced the revived, low-cost Datsun brand in 2014.

The budget brand hasn’t been meeting sales targets and Nikkei Asian Review reports its operations in Indonesia and Russia will be shuttered.

Among other controversial decisions, Nissan also sought to increase their market share in the US to 10 per cent of the total market.

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To get there, it significantly increased incentives and fleet sales, with resale values suffering as a result. After several years of strong growth, Nissan sales fell 10 per cent there last year.

The flat Chinese market hasn’t proven a saviour for Nissan, either.

According to the report from Reuters, Nissan executives have estimated up to 40 per cent of the company’s global manufacturing capacity is either unused or under-used while marketing budgets account for 45 per cent of the company’s annual fixed costs.

Executives also said they expect these latest cuts, referred to as Phase Two, to fall short and for the company to both post a loss at the end of the fiscal year in March and fail to meet a targeted operating margin of 6 per cent by 2023.

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Ghosn has tried to distance itself from Nissan’s woes, blaming the company’s poor performance since 2017 on his replacement as CEO, Hiroto Saikawa.

His departure and subsequent media exposure has reportedly rattled Nissan management, Reuters reporting it’s “paralysed” their ability to perform the necessary restructuring moves.

Nissan’s marketing teams have their work cut out for them with a series of high profile launches in the pipeline.

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These include Nissan’s second electric vehicle, previewed by the Ariya concept, as well as redesigned versions of the Qashqai, X-Trail and Pathfinder.

Those launches won’t be cheap and may eat into the company’s cash reserves.

We've contacted Nissan for official comment.

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