In a dramatic move that underscores the severe challenges facing one of Japan’s automotive giants, Nissan Motor Company has announced plans to cut an additional 11,000 jobs globally and close more factories as part of a comprehensive recovery plan aimed at stemming massive financial losses. This latest round of layoffs, combined with previously announced cuts, will reduce Nissan’s global workforce by approximately 20,000 employees, marking one of the most significant restructuring efforts in the company’s history.
The Financial Crisis Driving Drastic Measures
Nissan is currently grappling with a staggering net loss of 670.9 billion yen (approximately $4.5 billion USD or $7 billion AUD) for the financial year ending March 2025. This represents a dramatic reversal from the 426.6 billion yen profit the company posted in the previous fiscal year. The severity of this financial collapse has forced the company’s hand, leading to what newly appointed CEO Ivan Espinosa has described as a “wake-up call” for the organization.
“Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support,” Espinosa stated during a press conference announcing the recovery plan.
The financial downturn is further illustrated by the company’s operating profit, which plummeted 88% to just 69.8 billion yen ($472 million) in the 12 months to March 2025. With such dire financial metrics, Nissan executives have acknowledged that a quick turnaround is unlikely, with the company projecting a 200 billion yen operating loss in the first quarter of the new fiscal year.
The Re:Nissan Recovery Plan: Comprehensive Cost-Cutting
The company has branded its turnaround strategy as “Re:Nissan,” an action-based recovery plan targeting total cost savings of 500 billion yen through both fixed and variable cost reductions. The plan aims to return the company to profitability by fiscal year 2026 through a series of aggressive measures:
Fixed Cost Reduction (250 billion yen target)
- Reduction of global workforce by 11,000 jobs, affecting manufacturing, sales, general administration, and research & development functions
- Consolidation of vehicle production plants from 17 to 10
- Streamlining of powertrain plants
- Work shift adjustments and capital expenditure reductions
- Cancellation of the planned Lithium Iron Phosphate battery plant in Kyushu
- Revamping development processes
Variable Cost Reduction (250 billion yen target)
- Accelerating engineering and cost efficiencies
- Temporarily pausing advanced and post-FY26 product activities
- Mobilizing 3,000 employees to focus exclusively on cost reduction initiatives
- Establishing a dedicated cross-functional transformation office with 300 experts to make cost decisions
“Re:Nissan is an action-based recovery plan that 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,” said Espinosa.
Market Challenges and External Pressures
The drastic measures come against a backdrop of multiple market challenges that have severely impacted Nissan’s performance. These include:
Declining Sales in Key Markets
Nissan has experienced significant sales drops in its two most critical markets: the United States and China. Together, these markets account for nearly half of Nissan’s global sales by volume. The company reported a 3% decrease in U.S. sales and a more alarming 14.3% drop in China for the first half of the financial year.
Intense Competition
The company faces increasingly fierce competition, particularly in China where domestic manufacturers like BYD are dominating with affordable electric vehicles (EVs) and hybrids that feature advanced technology. This technological gap has left Nissan struggling to maintain its market position.
Product Strategy Missteps
Industry analysts suggest that Nissan failed to capitalize on the growing popularity of hybrid models in the United States, missing a significant market trend. Despite being an early leader in the EV market with models like the Leaf, the company failed to build on this advantage, allowing competitors to overtake its position.
U.S. Tariff Pressures
The tariffs on auto imports imposed by U.S. President Donald Trump have created additional financial pressure on Nissan’s operations. The company has developed a mitigation strategy that includes prioritizing U.S.-built products, optimizing local capacity, reallocating tariff-exposed production, and working closely with suppliers to localize and adapt to market demands.
Failed Merger Talks
The recovery plan comes in the wake of collapsed merger talks with Honda, which was followed by the resignation of former CEO Makoto Uchida and other senior executives. According to reports, Honda’s proposal to make Nissan a subsidiary was deemed unacceptable by Nissan leadership, who were concerned about preserving the company’s autonomy.
Leadership Changes and New Direction
The appointment of Ivan Espinosa as Nissan’s new CEO marks a significant change in leadership during this critical period. Espinosa has emphasized the need for a shift in Nissan’s business philosophy, moving away from a volume-focused approach to one centered on profitability.
“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,” Espinosa stated.
This represents a significant departure from the company’s strategy under former Chairman Carlos Ghosn, which critics say focused too heavily on sales volume and relied on heavy discounts to maintain market share. This approach reportedly left Nissan with an aging product lineup that the company is now scrambling to update.
The company has also appointed Guillaume Cartier as Nissan’s first-ever Chief Performance Officer, highlighting the renewed focus on operational efficiency and financial performance.
Industry Context and Broader Implications
Nissan’s struggles are not occurring in isolation. The global automotive industry is undergoing significant transformation, driven by the shift toward electrification, increasing competition from new market entrants, supply chain disruptions, and changing consumer preferences.
Japanese automakers in particular have faced challenges adapting to these changes. Honda recently reported a surprise 15% drop in second-quarter operating profit due to declining sales in China, while Panasonic announced plans to cut 10,000 jobs amid restructuring costs expected to reach $900 million.
For Nissan, which has never fully recovered from the disarray following Ghosn’s dramatic exit in 2018 and the subsequent scaling back of its partnership with Renault, the current crisis represents an existential challenge that will test the resilience of its brand and business model.
The Road Ahead: Challenges and Opportunities
While the Re:Nissan plan outlines a clear path to recovery, significant challenges remain. The company has abandoned its previous “Arc” strategy, which aimed to grow sales by one million vehicles by the end of the 2027 fiscal year. Instead, it is now realigning production capacity with a more modest sales goal of 3.5 million vehicles—just 100,000 more than current levels.
Inventory levels remain problematically high, with Nissan’s vehicle stock having increased from 250,000 units in March 2022 to 660,000 by the end of 2024. The company had planned to reduce this figure in the second half of the fiscal year but has thus far failed to make significant progress.
Additionally, while the cost-cutting measures are necessary for short-term survival, they may impact Nissan’s ability to invest in future technologies and new product development at a time when the industry is rapidly evolving. Balancing immediate financial needs with long-term strategic investments will be a delicate task for Nissan’s leadership.
Industry Analysts’ Perspectives
Industry observers have offered mixed assessments of Nissan’s recovery plan. Some view the drastic measures as essential given the company’s precarious financial position, while others question whether cost-cutting alone will be sufficient to address fundamental issues with product strategy and market positioning.
“Nissan is now paying the price for years when it focused too heavily on sales volume and used heavy discounts to keep cars moving off lots,” noted industry analysts. This approach has left the company with an aging product lineup and weakened brand value that will take time to rebuild.
A Pivotal Moment for Nissan
The announcement of 11,000 additional job cuts and factory closures represents a pivotal moment in Nissan’s long history. The success or failure of the Re:Nissan recovery plan will likely determine whether the company can regain its footing as a major global automotive player or face further decline in an increasingly competitive and rapidly changing industry.
As Nissan implements these sweeping changes, the impact will be felt not only by the thousands of employees directly affected by the cuts but also by communities where Nissan facilities are located, suppliers dependent on the company’s business, and the broader Japanese automotive ecosystem.
For Espinosa and his leadership team, the challenge is clear: transform Nissan into a leaner, more agile organization capable of competing effectively in a new automotive landscape while preserving the company’s heritage and core strengths. The coming months and years will reveal whether this ambitious recovery plan marks the beginning of Nissan’s renaissance or merely a chapter in its continued struggle for survival.