Nissan Motor Co Ltd has announced ‘Re:Nissan’, a recovery plan designed to enhance performance and create a leaner, more resilient business ‘that can adapt quickly to market changes’. With new management, the company is reassessing its targets and has conducted a comprehensive review of key initiatives and introduced further measures to ensure a strong recovery.
Ivan Espinosa, Nissan’s president and CEO, said: “In the face of challenging FY24 performance and rising variable costs, compounded by an uncertain environment, we must prioritise 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 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.
“The company is targeting a total cost savings of 500 billion yen (about $3.502 billion) versus fiscal year 24 actuals in fixed and variable cost savings. These savings will establish a framework to secure operating profitability and free cash flow in the automotive business by fiscal year 2026.”
Variable cost reduction targetIn the new plan, Nissan has set a variable cost reduction target of 250 billion yen, which it aims to achieve by ‘accelerating engineering and cost efficiencies while implementing a rigorous governance model’. Among many of the company’s considerations, Nissan will restructure its ‘supplier panel to secure more volume for fewer suppliers, eliminating inefficiencies and challenging legacy standards’; and while maintaining a strong focus on variable costs, Nissan will continue to seek additional opportunities to reduce fixed costs, targeting a total reduction of 250 billion yen by FY26 compared to its FY24 actuals.
Other changes include: consolidating its vehicle production plants from 17 to 10 by fiscal year 2027; reducing its global workforce by a total of 20,000 employees between fiscal years 2024 and 2027 (this includes direct/ indirect roles and contractual roles in manufacturing, SG&A and R&D); revamping its development processes by reducing engineering costs, complexity, and improving development speed; and redefining its market approach to better match local customer needs and tailor product strategy to align with the updated market approach.
Nissan will collaborate with partners to deliver models that complement its portfolio, and several projects with its alliance partners — Renault and Mitsubishi Motors (MMC) — are underway, including the 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.