Nissan just released its profits for the 2024 fiscal year, and they’re not great. In fact, the beleaguered Japanese automaker might have to lay off twice as many people as it initially projected last month, meaning a reduction of about 20,000 employees globally. To put that number in context, it represents a staggering 15 percent of the company’s total workforce. The layoffs will be gradual through the end of FY2027, meaning employees may have a couple years to line up alternative employment or plan for early retirement, but it still portends unfortunate news for Nissan – despite impressive sales of models like the Rogue and the reintroduction of the appealing Murano.
- Base Trim Engine
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2.0L 4-cylinder VC-Turbo gas
- Base Trim Transmission
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9-speed automatic
- Base Trim Drivetrain
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Front-Wheel Drive
Big Consolidation Means Big Layoffs
Nissan didn’t reveal how it would split up its workforce reduction, but a safe bet seems to be manufacturing employees. In its 2024 earnings report, the company acknowledged it would reduce its factory footprint from 17 to 10 facilities globally by the 2027 fiscal year, and it has also canceled the construction of a planned battery plant in Kyushu, Japan. Furthermore, Nissan says it will temporarily pause the development of any post-FY2026 projects, allowing 3,000 employees to focus their efforts on cost reduction rather than new-vehicle design.
Among those streamlining measures is a new focus on engineering efficiency for those pre-2026 products still in development. Models like the just-announced Nissan Skyline and the subcompact Infiniti crossover will be the first beneficiaries of the new process, which aims to rationalize global research and development and allocate projects to the locations best suited to complete them. Furthermore, the company will reduce its parts complexity by 70 percent before FY2027, primarily by eliminating six of its current 13 vehicle platforms – the aforementioned Infiniti crossover will share its bones with the Nissan Rogue.
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Furthermore, the automaker says it will leverage its existing partnerships with Renault and Mitsubishi, as well as its knowledge-sharing agreement with Honda, to improve its products and amoritize development costs across more vehicles. For example, Mitsubishi will get a version of the next-generation Nissan Leaf EV. The automaker says the cumulative effects of each of these tactics will reduce the time to develop new products and cut development costs per hour by 20 percent.
Nissan Sales Are Up, But Profits Are Down
Surprisingly, Nissan moved quite a few vehicles from its showrooms in 2024, with sales up more than 5 percent relative to 2023, but the effect may not have been great for the company’s bottom line. As we reported back in January, the company incentivized its dealers to slash prices by 15 percent or more from the MSRP in an effort to reduce overstock, but that meant selling cars at a loss that Nissan carried. That tactic may have contributed to the company’s estimated losses during FY2024 of 750 million yen ($5.1 billion).
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It’s a bloodbath.
Nissan’s efforts to consolidate its workforce and streamline the vehicle development process will contribute at least 500 billion yen ($3.4 billion) to its cost savings according to the company’s annual report. Better still, half that amount will be fixed savings, meaning they’re related to hard assets and mostly immune to market volatility, flagging vehicle sales, et cetera. Nissan said these approaches would return it to profitability by 2027, a lofty goal we hope the company reaches.
Source: Nissan via Motor1
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