AutoBeta(AutoBeta.net)11/07 Report--

Japanese automaker Nissan announced a cut in its annual profit forecast and will cut 9000 jobs and 20 per cent of global production capacity, according to several media reports. The report pointed out that in addition to cutting annual profit forecasts and layoffs, Nissan is taking measures, including reducing sales, comprehensive and administrative expenses, reducing costs, and optimizing its portfolio, in an effort to reverse its performance. Meanwhile, Makoto Uchida, president and chief executive of Nissan, will voluntarily give up 50 per cent of his monthly salary from November, while other executive committee members will voluntarily cut their salaries accordingly.

Today, Nissan announced its second-quarter results. Nissan reported a net loss of 9.34 billion yen (about 433 million yuan) in the second quarter; operating profit of 31.91 billion yen; and net sales fell 5.08 percent year-on-year to 2.99 trillion yen (139.289 billion yuan). In addition, as key markets such as China continued to face challenges, Nissan announced that it would lower its operating profit forecast for the current fiscal year from 500 billion yen to 150 billion yen (about 6.988 billion yuan). Net sales were reduced to 12.7 trillion yen from 14 trillion yen.

In addition, Nissan plans to appoint a chief performance officer in charge of sales and profits from December 1. "these transformational measures do not mean the company is downsizing. Nissan will streamline its business structure and improve resilience, while adjusting its management team to respond more quickly and flexibly to changes in the business environment," said Mr Uchida, CEO of Nissan.

Industry insiders believe that Nissan's poor financial performance has something to do with its declining sales in China. On November 6th, Nissan China announced its results for China in October 2024. Data show that Nissan's domestic sales in China, including passenger vehicles and light commercial vehicles, were 61200 in October 2024, down 16.52% from the same period last year. Of this total, Dongfeng Nissan (including Nissan, Qichen and Infiniti brands) sold 57300 vehicles, down 18.12 per cent from a year earlier, while sales in the light commercial vehicle sector (Zhengzhou Nissan) fell 17.79 per cent to 3800. In addition, Nissan's cumulative sales in China, including passenger vehicles and light commercial vehicles, totaled 558200 vehicles as of October 2024, down 9.98 per cent from a year earlier.

At present, earth-shaking changes are taking place in the global car market, especially in the Chinese market, where the penetration of domestic new energy vehicles is increasing rapidly, while the scale of the traditional fuel vehicle market is gradually shrinking. Japanese cars, which rely on fuel vehicles to drive sales, are generally suffering from a cold winter in China. China is one of Nissan's most important markets, after Nissan CEO Makoto Uchida said in an interview that Chinese carmakers were "getting stronger" and that Nissan was caught in a "survival game" in the Chinese market. If Nissan continues to do things the way it used to do, Nissan has little chance of survival. Nissan is committed to staying in China and is planning to work with local companies to remain competitive.

What needs to be faced squarely is that Nissan's performance in China is only a microcosm of many Japanese joint ventures in China. It is understood that Toyota sold 172300 vehicles in China in October, down 0.4 per cent from a year earlier, while cumulative sales in China in the previous October were 1.4129 million, down 9.3 per cent from a year earlier. Honda, which is also a Japanese car company, is also having a hard time in China. Honda's terminal car sales in China in October were 75400, down 42.15% from a year earlier, which is also the fourth consecutive month of Honda's decline of more than 40%. In the previous October, Honda's China terminal car sales totaled 663600, compared with 69.0% in the same period, down 31.00% from the same period last year.

In the environment of intensified competition in the global car market, China has become the fastest growing market for electric vehicles in the world, and the strong rise of China's new energy vehicles is having a huge impact on the traditional fuel vehicle market. This has also put pressure on Japanese manufacturers, including Toyota, Honda and Nissan. Since the beginning of 2024, the price war of new energy vehicles among Chinese car companies has become more and more inward, and more new energy vehicles have been listed intensively. As a result, the penetration rate of new energy vehicles in China has increased rapidly. Retail sales in the domestic passenger car market were 2.109 million in September, with retail sales of conventional fuel vehicles falling 22 per cent year-on-year to 990000, while retail sales of new energy passenger vehicles rose 50.9 per cent to 1.123 million vehicles, according to the Federation of passengers. In addition, the domestic retail penetration rate of new energy vehicles was 53.3% in September, exceeding 50% for the third consecutive month of the year.

In fact, manufacturers, including Nissan, are in urgent need of more substantial changes in both the global market and the Chinese market. Nissan said it plans to launch new energy vehicles in China and plug-in hybrid vehicles in the United States, while Nissan plans to shorten the car development cycle to 30 months, deepening cooperation with Renault, Mitsubishi Motors and Honda, while exploring more strategic partnerships in technology and software services, according to the Financial Associated Press. On November 4, Nissan and Mitsubishi agreed to set up a joint venture in March 2025 to provide services related to self-driving and the use of electric vehicle batteries as batteries.

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