Nissan Motor prepares to cut $2.8 billion in annual fixed expenditures as part of its restructuring plan, a report by Bloomberg News noted Wednesday, as the automaker braces for a decline in sales that could complicate its recovery from years of low profitability.
After a three-year spell of declining profits, Nissan will declare its restructuring plan on May 28, its recent attempt to cut costs following a strategy of aggressive selling to chase market share has hammered its bottom line.
The Japanese automaker prepares to cut fixed costs in areas that include marketing and research, Bloomberg reported, citing unnamed sources. It also said that the company’s board has not yet evaluated the plans.
Most automakers are planning for a big financial hit from the coronavirus, but Nissan’s sales and profits were declining even before the outbreak, forcing it to roll back the aggressive expansion plan led by ousted boss Carlos Ghosn.
Phasing out Nissan’s lower-cost Datsun brand, which has been having a hard time in Asian and Russian markets, and closing down an additional vehicle production line are one of the measures being considered, the report said.
A Nissan spokeswoman refused to comment on the report.
Since Ghosn’s arrest in Japan over alleged financial wrongdoing in 2018, Nissan has struggled to turn around its ousted boss’s growth strategy, which has left the company with a cheapened brand and under-utilized vehicle plants that have drained its finances.
Reuters has reported that the automaker has agrees that it must become a smaller, more efficient automaker, and that it intends to restore dealer ties and refresh lineups to regain pricing power and profitability.
