- Nissan is progressing with its turnaround strategy following failed merger talks with Honda
- Nissan plans to reduce global production capacity by 20% and shed 9,000 jobs
- Nissan continues to explore the potential for new partnerships
Nissan has outlined an updated turnaround strategy following the abrupt end of merger discussions with Honda last week. The proposed merger, valued at around $60 billion, was widely viewed as a potential lifeline for Nissan, which has faced years of declining sales and internal turmoil involving top executives.
The automaker first announced its turnaround plan last fall, and on Feb. 13, the same day it confirmed the collapse of the merger talks, Nissan revealed cost-cutting measures aimed at restoring financial stability. The company expects to reduce costs by approximately 400 billion yen (approximately $2.6 billion) by the end of fiscal year 2026.
A major component of Nissan’s strategy involves cutting global production capacity by around 20%, reducing it from 5 million to 4 million vehicles. This will result in a workforce reduction of approximately 9,000 employees and the closure of three plants. The first plant to be shuttered is in Thailand, slated for closure in fiscal year 2025. The locations of the other two plants have yet to be announced. Remaining factories may see production lines consolidated and shift patterns adjusted. In the U.S., Nissan’s plants in Smyrna, Tennessee, and Canton, Mississippi, will have reduced shifts.
These measures will help lower Nissan’s break-even point from the current 3.1 million vehicles to 2.5 million vehicles, with the company aiming to achieve a stable operating margin of 4%.
Nissan CEO Makoto Uchida
Beyond cost-cutting, Nissan is focusing on improving efficiency. The company aims to speed up vehicle development time and increase cost savings through greater commonality between models. The first vehicle developed under this streamlined approach is set to launch during fiscal year 2026. Nissan is also expanding its lineup with new plug-in hybrid models to capitalize on growing consumer demand for hybrids.
Additionally, Nissan announced plans to conduct a strategic review to explore new partnerships. On Feb. 12, Taiwanese contract manufacturer Foxconn confirmed it is in discussions with Nissan and is open to acquiring shares as part of any collaboration. Nissan is also reportedly in talks with a tech company for a potential partnership, similar to Honda’s collaboration with Sony, which resulted in the creation of their joint EV brand, Afeela.
Nissan is not alone in making drastic changes in response to pressures from the transition to electric vehicles and increasing competition from new entrants, particularly from China. Last year, Volkswagen Group threatened to shut down plants in Germany but reached an agreement with labor unions last December. The plants will be saved but need to become more competitive. Around 35,000 jobs will also be eliminated by 2030, though only through retirements and voluntary measures.
As Nissan moves forward with its turnaround strategy, the company aims to regain its competitive edge in a rapidly evolving industry. Without it, senior executives have warned that the automaker may only have around a year to survive.
