Nissan is planning to cut about 300 billion yen ($2.8 billion) in annual fixed costs and book restructuring charges as the coronavirus pandemic further depresses the automaker’s sales, a person with knowledge of the measures said.
Those initiatives are likely part of a three-year plan that will be unveiled along with financial results on May 28, calling for Nissan to take more drastic measures to turn the manufacturer around, said the person, asking not to be identified because the information is not public.
The automaker will phase out the Datsun brand, shut down one production line in addition to the recently closed operation in Indonesia and reach the reduced spending target this year by cutting marketing, research and other costs, the person said.
Nissan has been in turmoil since the November 2018 arrest of former Chairman Carlos Ghosn, with an aging car lineup and management paralysis denting its outlook. The automaker warned last month it expects to post a loss for the latest fiscal year through March, as the pandemic shuttered showrooms in major markets and the economic fallout dented consumer demand for new cars.
The plans still need to be reviewed by Nissan’s board and may change, people familiar with the deliberations around the restructuring plan said. The scale of the restructuring charge is still being determined as well, they said.
Although Nissan is forecasting a 12 percent decline in sales to 10.2 trillion yen for the just-ended fiscal year, the new mid-term plan calls for a return to revenue of 11.5 trillion yen within three years, with fixed costs kept at reduced levels, the person said.
A yet-to-be disclosed production line will be shuttered as part of the changes, bringing the worldwide total to 13. That will put Nissan’s utilization ratio at approximately 80 percent within three years, the person said. The plan assumes annual output capacity of about 5.4 million cars, they said.
Nissan’s utilization rate was about 65 percent in the just-ended fiscal year, according to data compiled by Bloomberg. Under the prior mid-term plan, Nissan had planned to reduce capacity to around 6.6 million units per year from 7.2 million.
“Nissan will announce a revised mid-term plan along with fiscal year 2019 financial results on May 28,” said Azusa Momose, a spokeswoman for Nissan. “We do not have any further comments on this subject.”