Nissan to implement new 'recovery program'

MANILA: Nissan has created a recovery plan that is designed to address challenges in the business.

Eyed to build a create a “leaner, more resilient business that adapts quickly to market changes,” the Japanese automaker established the “Re:Nissan” initiative.

Through this, the company is expecting to enjoy total cost savings of around 500 billion yen (approximately P189 billion) compared with the fiscal year 2024 (FY2024) actuals.

These reserves, Nissan said, will establish a framework to secure operating profitability and free cash flow in the automotive business by fiscal year 2026.

"In the face of challenging FY24 performance and rising variable costs, compounded by an uncertain environment, we must prioritize self-improvement with greater urgency and speed, aiming for profitability that relies less on volume. As new management, we are taking a prudent approach to reassess our targets and actively seek every possible opportunity to implement and ensure a robust recovery. Re:Nissan is an action-based recovery plan clearly outlines what we need to do now. All employees are committed to working together as a team to implement this plan, with the goal of returning to profitability by fiscal year 2026,” Nissan President and Chief Executive Officer (CEO) Ivan Espinosa said.

These are the strategies that will be implemented under the Re:Nissan program.

• Variable cost reduction

 To cut 250 billion yen (around P94.56 billion) in cost, the company engineering and cost efficiencies while implementing a rigorous governance model by establishing a cross-functional transformation office under Chief TdC Officer to make cost decisions.

Aside from that, Nissan will suspend advanced and post-FY26 product activities to mobilize 3,000 people to focus on cost-reduction initiatives.

This transformation involves the restructuring of its supplier panel to secure more volume for fewer suppliers.

• Fixed cost reduction

While focusing on variable costs, Nissan will continue to find additional opportunities to reduce fixed costs — targeting a total reduction of 250 billion yen (P94.56 billion) by FY26 compared to its FY24 actuals.

• Restructuring manufacturing base, refine efficiencies

Nissan will merge vehicle production plants from 17 to 10 by fiscal year 2027; streamline its powertrain plants and accelerate job reformation, work shift adjustments, and capital expenditure reductions; and cancel the planned Lithium Iron Phosphate battery plant in Kyushu.

• Manpower reduction

Further, Nissan will also trim down its workforce by 20,000 employees between fiscal years 2024 and 2027 — including the previously announced reduction of 9,000. These figures cover direct/indirect and contractual roles in manufacturing, Selling, general administrative expenses as well as research and development functions.

• Overhaul development

The marque is also Nissan is overhauling development processes by reducing engineering costs, complexity, and improving development speed to reduce the workforce's average cost per hour by 20 percent.

Per Nissan, it will lower parts complexity by 70 percent, while the integration and optimization of platforms will decrease the number of platforms from 13 to 7 by fiscal year 2035.

“The company will advance its efforts to significantly shorten the development lead time of the first vehicle to 37 months and subsequent family vehicles to 30 months. Models developed under this process include the all-new Nissan Skyline, the all-new global C SUV, and the all-new INFINITI compact SUV,” the company noted.

• Redefined market, product strategy

To better match local customer needs, Nissan also reshaped its product strategy to be more market-focused and more brand-oriented.

“Commitment to innovation will accelerate, bringing exciting advancements to valued customers. It will be centered around signature Nissan models that deliver strong nameplates which represent the heartbeat of Nissan globally, volume-driving models that will be the key drivers of the company’s performance and growth,” the firm explained.

With this, the United States, Japan, China, Europe, Middle East and Mexico will be positioned as key markets while adopting a customized approach for other regions.

• Boost partnerships

Nissan will team up with partners to deliver models that complement its portfolio and meet unique market needs.

Several projects with its alliance partners, Renault and Mitsubishi Motors Corporation (MMC) are underway, including the recently announced initiative for an all-new battery electric vehicle (BEV) based on the next-generation LEAF for MMC's North American market. Nissan and Honda will continue their collaboration in vehicle intelligence and electrification.

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