Nissan Motor Co. is pressing ahead with a major restructuring, announcing a cut of 9,000 jobs and a 20% decrease in global production. The firm is thus slashing $2.6 billion in costs for the current fiscal year as sales are declining in both the U.S. and China, two critical markets.

Nissan's job cuts and production adjustments reveal the firm's failures to regain stability since the trying period. The company has not yet fully recovered from the ripples caused by former Chairman Carlos Ghosn's removal in 2018 and its tense alliance with Renault SA. Nissan also reduced a projected profit by 70% to ¥150 billion ($975 million), marking the second profit reduction this year. Cost-cutting measures are deemed necessary to offset the aggressive competitive environment in both China and the United States.

China and the U.S.: Challenges in Key Markets.
Like many other foreign automobile manufacturers, Nissan is facing severe challenges in China. The market has been dominated by local players like BYD and other homegrown manufacturers who have aggressively taken significant market share with low-priced EVs and advanced hybrid technology. This has forced global play to quickly adapt.

The biggest challenge Nissan faces in the United States is its very tiny hybrid lineup. While Toyota has capitalized on this rising demand for hybrid models, Nissan has been playing catch up. According to the current chief executive Makoto Uchida at a recent press conference, Nissan did not anticipate the higher demand for HEVs in the United States and, hence, lags in catching up with its model lineup there.

Cost-cutting efforts and structural changes
Nissan announced 9,000 cuts in jobs, or 6.7% of the total number of its staff around the globe, at about 133,580. Not only will it cut jobs but also its production capacity to the tune of 20%. It will accelerate the development of its cars from 42 months to 30 months and strengthen collaboration with alliance partners Renault and Mitsubishi Motors.

With such restructuring efforts in place, Uchida and all the other members of the executive committee have voluntarily taken decisions to cut their respective monthly salaries by up to 50%. This move shows commitment from leadership both in terms of cost control as the leadership allows the entire company to undergo restructuring.

Another stake to be disinfested is its 10% stake in Mitsubishi Motors, which may accrue up to ¥68.6 billion or $445 million. The Chief Monozukuri Officer, Hideyuki Sakamoto, said that it would adjust production line speeds and global factory patterns as measures to further create the squeeze on production efficiency.