A merger with rival Honda may be Nissan’s best â or perhaps only â shot at survival.
The Japanese automaker is challenged in China, emerging markets and the United States â its largest market. Operating profits dropped 90% and net income dropped 94% in the first half of fiscal year 2024, compared with the same period a year earlier.
It’s facing a combination of stiff competition from rising Chinese automakers, a lost lead in the global electrification race and missteps in the U.S.
A report from the Financial Times in November, citing an unnamed source, said the company had “12 or 14 months to survive.” Nissan told CNBC those comments were based on “speculation”.
“We continue to maintain strong levels of liquidity and are progressing with investments in new products and technologies,” said Brian Brockman, Nissan’s vice president of communications for the U.S. and Canada.
The company, however, is shuffling several executives, cutting 9,000 jobs and slashing production by about 20%, it said in a presentation to investors after it delivered its results for the first half of fiscal year 2024. CEO Makoto Uchida is reducing his monthly compensation by about 50% and said other executive committee members will also take cuts, though the company did not elaborate on details.
“These are desperate measures,” said Felipe Munoz, global automotive analyst for JATO Dynamics, which studies and provides data on the global industry. “They were not prepared for this new reality after pandemic and after the semiconductor shortage, which put the Chinese carmakers almost at the top.”
But the company does have some strengths. It has six models for sale in the U.S. that start below $30,000, which sets it apart at a time when the average transaction price in the U.S. is close to $50,000.
If you can carve out a niche that’s the value niche, the inexpensive but reliable vehicle for first-time buyers or new families, I think that’s a strategy that can win in the marketplace,” said Alan Haig, founder and president of Haig Partners, an investment bank that facilitates dealership acquisitions.
“We’ve been here before with Nissan,” Haig said. “I believe that the strength of Infiniti and Nissan are sufficient to survive this, particularly if they can get a partner.”
Watch the video to learn more.
