Nissan bets big on 'RE: Nissan': Job cuts, next-gen cars. India's part in the play

This strategy aims to take the company to profitability by FY26, righting deep-seated cost problems in the face of an unpredictable global auto industry, with particular implications and opportunities for its Indian business. A sobering financial realityNissan’s FY24 performance was a strict “wake-up call,” as eloquently put by CEO Ivan Espinosa. The automaker announced a whopping net loss of $4.5 billion, with operating profit declining a whopping 87.7 per cent. These financial woes were caused by a combination of reasons such as reduced volume sales in major markets, a poor product mix, harsh pricing competition, and most importantly, soaring operational and restructuring expenses. Also Read : Carlos Ghosn predicts trouble ahead for Nissan-Renault Alliance amid shrinking ties Nissan Chief Financial Officer Jeremie Papin pointed out that higher costs, such as a large $405 million spent on restructuring, were the main reason for the losses. The harsh reality, as Espinosa explained, is that the variable costs of the company are increasing, and its fixed costs have exceeded what current levels of revenue can support. The paradox of sales versus profitabilityInterestingly, the economic downturn was not entirely a mirror of falling sales numbers. Worldwide, Nissan’s auto sales fell by a relatively modest 2.8 per cent. Although the key Chinese market fell by a sharp 12.2 per cent, North American sales surprisingly rose by 3.3 per cent. Total revenue was flat overall, falling by less than half a percent year-over-year. This means that Nissan was still selling cars but was struggling with the cost of doing business, effectively “drowning in costs” while still having a facade of sales activity. The company expects FY25 to be a transition year, predicting a modest decline in worldwide sales and ongoing financial losses, the magnitude of which is still shrouded in global uncertainties such as possible tariff effects, which are estimated to cost Nissan approximately $3 billion. Nissan wants to cut engineering expenses for new-product development by 20 per cent, reduce product complexity by 70 per cent, and speed up development cycles to 30 months “RE: Nissan”: A blueprint for transformationIn reaction to the crisis, Nissan has initiated “RE: Nissan,” a drastic turnaround plan. CEO Ivan Espinosa reaffirmed the call for “self-improvement with increased sense of urgency and pace, heading towards profitability based on lower reliance on volume.” The strategy maximizes Nissan’s current liquidity level of a sizable $23 billion, further buoyed by available credit lines totaling $14.2 billion. One of the pillars of “RE: Nissan” is cost cutting aggressively. This involves another 10,000 job reductions, taking total workforce cuts to around 20,000. The majority of these will come from the elimination of seven factories by 2027, rationalizing its global presence from seventeen to ten bases. Also Read : Renault buys Nissan’s 51% stake in India joint venture, takes full control of operations The aim is to streamline manufacturing processes and keep plant use at around 100 per cent. In addition, Nissan wants to cut engineering expenses for new-product development by 20 per cent, reduce product complexity by 70 per cent, and speed up development cycles to 30 months. All these goals individually are aimed at a cost reduction of $3.4 billion. The Indian imperative: Challenges and opportunitiesFor Nissan India, the global restructuring poses challenges and opportunities alike. The Indian market has been a mixed bag for Nissan, with the Magnite compact SUV being a key volume driver and a success story. Launched towards the end of 2020, the Magnite has played a key role in keeping Nissan alive in the Indian automotive landscape, riding on the Renault-Nissan alliance’s CMF-A+ platform that it shares with the Renault Kiger. The global “RE: Nissan” strategy’s focus on building on current partnerships strongly mirrors Nissan’s operations in India, around the Renault-Nissan Automotive India Private Ltd (RNAIPL) production plant in Oragadam, Chennai. This facility is a key center for both local and export production. As Nissan attempts to consolidate its supply base internationally for more volume with fewer suppliers, the Indian operations, with proven local sourcing, may prove to be key. Also Read : Nissan bets big on Magnite facelift to kickstart its turnaround journey The worldwide strategy of emphasizing profitability with reduced dependence on sheer numbers can translate into a more segment-focused strategy in India. This can mean ramping up on successful segments such as compact SUVs, with perhaps new hybrid technologies—a focus area for North America—tailored to the Indian market, and competitive cost structures. Though specific effects of global plant shutdowns or layoffs on Indian operations have not been mentioned, the emphasis in all likelihood would be on optimizing the Chennai factory’s production and efficiency. Designing new crossovers elsewhere could also entail future products designed to suit Indian tastes. The carmaker recognizes that FY25 will be a transition year and one of difficult choices. CFO Jeremie Papin said, “While FY25 is a year of challenges and uncertainties, the actions we are taking as part of our new recovery plan are designed to deliver positive outcomes in FY26.” Nissan’s road to revival is unquestionably daunting. Yet the fact that it can continue selling cars and boasts substantial cash buffers gives its aggressive “RE: Nissan” strategy a basis. The next few months will prove pivotal in showing if these global and local market strategic adjustments can get the automaker back on the path of sustainable profitability. The success of the Magnite models in India is a beacon of how targeted, market-specific tactics can bear fruit even in the face of other corporate difficulties. Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape. First Published Date: 14 May 2025, 09:54 AM IST
Source: hindustantimes.com