Industry

Nissan Posts $6.2 Billion Loss in 2019 But Reveals Big Plans for Turnaround and Profitability

The plan includes plant closures in Spain and Indonesia.
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Nissan reported an annual net loss of 671.2 billion yen (about $6.2 billion or P315.3 billion) last year mainly due to sluggish sales in key markets worldwide. It’s the first loss for the Japanese automaker in 11 years and reportedly the largest in 20 years. 

Simultaneous with its announcement of its 2019 financial performance, the company also revealed a plan to scale back manufacturing and operations and improve efficiency in a bid to return to profitability.

“Our transformation plan aims to ensure steady growth instead of excessive sales expansion,” Nissan CEO Makoto Uchida said. “We will now concentrate on our core competencies and enhancing the quality of our business, while maintaining financial discipline and focusing on net revenue per unit to achieve profitability. This coincides with the restoration of a culture defined by ‘Nissan-ness’ for a new era.”

In its four-year plan, Nissan said it would cut production by 20 percent to about 5.4 million vehicles a year. This includes the closure of its plant in Barcelona, Spain and another facility in Indonesia. When this happens, Thailand would be its sole production base in Southeast Asia.

The plan calls for the optimization of its plants in North America as well as a streamlining of its product portfolio. This means a reduction of its car models by 20 percent—from 69 to around 55—by 2023.

Nissan also intends to prioritize core markets and products, which means a focus on core operations in its home base of Japan, China, and North America. It said it will exit South Korea, give up its Datsun business in Russia, and “streamline operations in some markets in ASEAN.”

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At the same time, the Yokohama-based carmaker said it would focus on global core model segments, including enhanced C and D segment vehicles, electric vehicles, and sports cars. It will also introduce 12 models in the next 18 months, including the highly anticipated Nissan Rogue for the American market.

In 2019, Nissan sold 4.9 vehicles, an 11 percent drop from the previous year. Net revenues fell to 9.879 trillion yen resulting in an operating loss of 40.5 billion yen.

Still, the carmaker said its cash on hand for the automotive business totaled 1.495 trillion yen, while automotive net cash was 1.065 trillion yen.

“In addition, the company continues to have access to approximately 1.3 trillion yen in credit lines, which remain unused. Furthermore, in response to the COVID-19 pandemic, we raised an additional 712.6 billion yen in funding this April and May,” the company added in its financial report.

While the company mirrored estimates that the global total industry volume would plunge by approximately 15 percent to 20 percent compared to the previous year mainly due to the coronavirus pandemic, it declined to provide its own outlook for its business in the current year.

“We will issue the FY20 forecast as soon as we are able to reasonably calculate an outlook for the fiscal year,” it said. 

Nissan is in an alliance with fellow Japanese company Mitsubishi and French carmaker Renault. On Wednesday, the three companies released a statement saying that they intend to work more closely together to save up to 40 percent to jointly develop vehicles and improve overall business in the coming months. Nissan said it will take the lead on autonomous driving, Renault on the body of electric cars and some electric powertrains, while Mitsubishi Motors will work on plug-in hybrids. 

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“Nissan must deliver value for customers around the world,” Uchida said. “To do this, we must make breakthroughs in the products, technologies and markets where we are competitive. This is Nissan’s DNA. In this new era, Nissan remains people-focused, to deliver technologies for all people and to continue addressing challenges as only Nissan can.”

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Paul John Caña
Associate Editor, Esquire Philippines
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