Nissan Motor’s management has become convinced the automaker needs to be much smaller and a restructuring plan due out next month would probably consider cutting 1 million cars to its annual sales target, senior company sources stated.
Even prior to the spread of the coronavirus pandemic, Nissan’s sales and profits had been reducing and it was burning through cash, forcing it to row back on an aggressive expansion plan pursued by former boss Carlos Ghosn. The pandemic has only piled on urgency and increased pressure to renew efforts to downsize.
No new sales target has been finalized and it is not clear whether one will be formally disclosed.
But the automaker’s plans for restructuring through to March 2023 should be based on the assumption that it would only be able to get back to annual sales of 5 million cars by then, two sources stated, adding this would entail a large decline to manufacturing capacity.
That compares with a goal of 6 million cars for the same duration outlined in July by the CEO of that time Hiroto Saikawa, who had already stepped back from around 8 million targeted under Ghosn. Nissan likely sold about 5 million cars in the last financial year but this year’s outlook would involve less sales because of the coronavirus.
“For years, Nissan was looking for annual sales volumes around 7-8 million vehicles. The company has never managed to sell much over 5 million or so,” one of the sources informed Reuters. “The company can no longer consider this sort of wishful thinking. The resizing issue is really being taken into account, it has a lot of consequences on operations for 2020-2022.” A third senior company source stated the figure could be even less than 5 million because of the impact of the coronavirus.
The sources refused to be identified as information of the turnaround plan have yet to finalized.
The automaker has requested a $4.6 billion commitment line from major lenders to cushion the impact of the pandemic while it looks forward to engineer the desperately needed turnaround, people with knowledge of the issue have said.
