Nissan reveals major restructuring plan after operating profit plunges

Just a couple of days ago, Nissan Motor Co’s quarterly report was revealed and it was looking pretty bad. This echoes what the last quarter report had indicated and what some Nissan execs at that time even gave out warnings for.

In seeing how Nissan’s doing now, it is pretty much obvious that that statement by CEO Hiroto Saikawa a couple of months ago, indeed came true and was much worse than what they had predicted. Let's find out more with Philkotse.com. 

1. The Nissan Quarterly (Q1) Performance report: Dismal performance

With regards to the report that Nissan confirmed to be true, it appears that the Japanese car company experienced a massive 90 percent reduction in their quarterly operating profit. That’s 13 percent compared to last year’s revenue.

According to a Japanese newspaper, this was absolutely far worse than what most analysts and company officials had predicted some time ago. In fact, the average predictions they gave out was only at around a 66 percent drop in April to June range.

But for the first quarter, operating profit dropped down to 98 percent which is attributed greatly to Nissan’s lackluster performance in North America where they gave out massive discounts in order to keep up with their competitors.

Take note the difference in operating profit between Q1 2018 and Q1 2019

This also echoes what happened way back in 2008 -2009 where a global financial crisis happened. As such, Nissan appears to be floundering in its recovery and in acquiring stability.

Another great contributor or at least one of the reasons as to why this happened can be attributed to Carlos Ghosn back when he was CEO where he had created large sales targets.

In order to reach those targets, Nissan flooded the market with vehicles through a lot of channels, be it through fleet sales, discounts, etc. This of course had caused a great reduction of residual values from leases and of course, the cheapening of the brand’s image.

Compounding this, of course, is Ghosn’s previous and current slew of legal troubles which had to some degree affected the Nissan-Renault-Mitsubishi alliance as a whole. The relationship among these companies nowadays is a bit tense which is of course overall bad for business.

>>> Refer to our Nissan Philippines price list to keep updated the latest pricing of all Nissan models.

2. The Nissan strategy for survival

If it isn’t obvious before, Mr. Saikawa, Nissan’s current CEO who has been tasked with cleaning up Ghosn’s mess is in for a world of pain as it appears that Nissan will have to downsize a bit further in the foreseeable future.

Nissan CEO Hiroto Saikawa not only needs to deal with this dismal performance but also other on-going issues

From another Japanese news source, it has been reported that Nissan is planning to cut 5,200 jobs which are on top of the 4,800 workers announced back earlier this year. By 2023 however, Nissan will again further cut down more jobs so those aforementioned numbers are not the full picture of just exactly how much.

 By 2022, Nissan even revealed that they are planning to streamline Nissan models line-up, but as to how or what products they will remove are yet to be announced.

While Mr. Saikawa didn’t exactly say where these cuts will take place, Nissan at the beginning of 2019 had shut down two of their luxury car productions in the UK specifically the Infiniti Q30 and the QX 30 SUV.

It is also quite plain to see that Nissan has lost quite a bit of market share globally

While analysts might connect this to the Brexit fiasco, some others attribute this to the falling overall performance of Nissan which date back to the late ’90s and even the financial crisis which many businesses still hasn’t recovered from. And of course that thing with Carlos Gohsn.

It is also quite plain to see that Nissan has lost quite a bit of market share globally. In the US, they had a hold of about 8.1 percent last year in comparison to the current 7.9 percent. While that might sound minuscule, those numbers are actually quite massive, especially in the automotive industry.

In Europe, Nissan sales had in fact reduced by 16 percent in comparison to how they did at the region back in 2018. Now that loss of market share in Europe in comparison is gargantuan.

3. Nissan in the Philippines right now

Overall, car sales in the country are optimistic as it had actually grown by around 0.38 percent in the 2019 2^nd quarter at around 97,375 total vehicles sold.

While Nissan Philippines still holds around 10.5 percent of the total market share in our local automotive marketplace, it had in fact also slowed down a little bit which is quite the contrast to Philippines Mitsubishi and Toyota’s growth.

Nissan had in fact also slowed down a little bit which is quite the contrast to Mitsubishi and Toyota’s growth

This also reflects the overall global situation of Nissan right now so many are not surprised at all at the said company’s current local performance.

With the imminent release of the Nissan Leaf here in the country and the unveiling of the new Nissan GT-R 2020 however, we just hope that Nissan will indeed recover to some degree.