Nissan unveils turnaround plan after posting biggest loss in two decades

The Japanese car maker aims to eliminate about $2.8bn worth of annual fixed costs

The Nissan Motor Co. plant stands in Barcelona, Spain, on Thursday, May 28, 2020. Nissan said it intends to close its Barcelona plant, in addition to the one it is planning to shutter in Indonesia. Photographer: Angel Garcia/Bloomberg
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Nissan Motor reported a 671 billion yen ($6.2bn / Dh22.8bn) net loss for the latest fiscal year and unveiled a plan to turn the carmaker around by eliminating about 300bn yen in annual fixed costs, cutting capacity and reducing the number of car models.

The result – the biggest loss in two decades – includes restructuring charges, the Yokohama-based company said in a statement Thursday. The car maker didn’t issue a forecast for the current fiscal year, citing uncertainty over the business because of the coronavirus pandemic.

The four-year plan calls for more drastic measures to turn the manufacturer around by cutting marketing, research and other costs. The company will make fewer models, less than 55 from the current 69, while cutting production capacity by 20 per cent to about 5.4 million vehicles per year. Nissan said it intends to close its Barcelona plant, in addition to the one it is planning to shutter in Indonesia.

The restructuring plan is part of a broader push by Nissan and alliance partners Renault and Mitsubishi Motors to focus on costs and profitability to weather a collapse in car demand due to the coronavirus pandemic.

Nissan has been in turmoil since the November 2018 arrest of former chairman Carlos Ghosn, who had pushed for volume growth. This all comes as the industry is being disrupted by the shift to electric vehicles and autonomous driving.

Sales fell 15 per cent to 9.9 trillion yen. Shares of Nissan have slumped 29 per cent this year, outpacing the declines by competitors Toyota and Honda.

As part of the three-way alliance, Nissan is focusing on its main markets of the US, Japan and China. Among the three regions, China is a bright spot as its economy sputters back to life after shutting down in the early days of the virus outbreak. Nissan’s sales volume in China climbed 1.1 per cent to 122,846 vehicles in April, helping it claw back some market share, figures showed earlier this month.

Nissan said it has “sufficient liquidity to steer through this challenging business environment”, with cash and cash equivalents of 1.5tn yen and access to about 1.3tn yen in credit.