Is Nissan Headed For Bankruptcy?
Nissan is facing major trouble as the carmaker experiences a huge decrease in sales. The major car brand revealed that there was a 90% decrease in profit from last year. Now, the carmaker has plans to cut 9,000 jobs around the world and nix 20% of its global manufacturing. As their workers head into the holidays, many of them are asking one question: Is Nissan headed for bankruptcy?
What Happened With Nissan?
Nissan was initially sold in the United States under the name Datsun. At one time, the car brand was thought to be on the same level as reliable vehicles like Toyota and Honda. The company has released some beloved cars over the years, including the Z sports car and even trucks like the Frontier.
Despite its past and ability to become competitive in the market, Nissan is still lagging behind Honda and Toyota. As mentioned above, Nissan suffered a 90% decrease in profit from last year. “A car company as big as Nissan that’s hard to wrap your head around,” Melvin Swafford, a truck driver, told CBS News. “The people that work for them they will be out of jobs and that’s a difficult one.”
Now, the company is taking drastic measures to be able to maintain its presence in the U.S. Nissan CEO Makoto Uchida said that the company would have to make some serious moves to get out of an “extremely tough situation.” On top of laying off 9,000 people worldwide and shutting down much of its production, Nissan sold a sizable share of Mitsubishi as well. All of this was in an effort to save $3 billion and save the company.
This decision wasn’t made without consequences for the CEO either. Uchida announced that he would also be taking a 50% pay cut to assist with cost-cutting measures. But will Nissan be able to pull itself out of this rut? “The question is how to do it fast and adapt to reality,” Uchida said. “We cannot deny the fact that our sales plan was overstretched given the rapid changes in markets.”
What This Means For Dealership Owners
The biggest place where Nissan is falling behind is in the United States. Reports have stated that the average profitability of Nissan’s dealers in the U.S. is at its lowest level in nearly 15 years. On top of that, the company’s U.S. market share is at its lowest in the last five years at just 5.6%.
Ultimately, Nissan is struggling with new car sales. Data from 2023 shows that the carmaker only sold 834,097 units across its entire lineup. This is a 26% drop from 2013 when Nissan sold 1,131,965 cars in the States.
“In many markets, Nissan dealers are, at best, selling half the volume that competing Honda, Toyota, Subaru, and Hyundai stores are selling,” one dealer pointed out. “If you’re not selling enough new cars, you’re not generating enough trade-ins, which feed profit centers such as finance, service, and parts.”
An unnamed senior official said that Nissan is operating on borrowed time at this point. They are actively seeking an anchor investor to help them get through the next calendar year. “We have 12 or 14 months to survive,” the senior stated. “This is going to be tough. And in the end, we need Japan and the US to be generating cash.”
Nissan Americas Chairperson Jeremie Papin sent out a memo to the dealers in the U.S. at the end of November. In the message, Papin wrote, “We are working diligently to implement turnaround actions and the stability and future value they will bring to valued business partners like you is a high priority for us. We are working hard to deliver more details on these action plans. In the meantime, we ask for your patience and understanding.”
That said, dealers have been left in the dark. One shared that the message “did nothing to address the speculation and apparent financial difficulties Nissan is facing.”
What This Means For Car Owners
While there are no current plans to close mass numbers of Nissan dealerships at this time, it could happen if they aren’t able to turn things around. If that’s the case, you might have trouble finding someone to service your car, especially if you typically bring it to your local Nissan dealership for a tune-up. Unless they are able to resolve the current crisis, this could very well happen in the near future.
There is still hope for the carmaker though.
Is Nissan Going Bankrupt?
Ultimately, Nissan needs a new anchor investor to keep going. Renault, who saved the carmaker from going bankrupt in 1999, is slowly pulling out of its stake in the company. The French automaker reduced its stake in Nissan from 46% to less than 36%. That said, Effissimo Capital Management and Oasis Management Group are two companies that have shown special interest in Nissan.
Papin noted that the car manufacturer exists in a very competitive market. Now, the company plans to shift focus to modernize its lineup. One major thing it hasn’t done that its competitors are excelling at is getting into the EV and hybrid wave. While Honda and Toyota lead the pack in hybrid and EV cars, Nissan doesn’t have a single hybrid vehicle in its U.S. lineup. Honda is working with Nissan and Mitsubishi to share some of its EV technology. Some people have even suggested that Honda might step in to save Nissan like Renault did 25 years ago.
Within the next three years, Nissan plans to introduce three electric variants of the Rogue, which is its best-selling vehicle in the States. This will include a plug-in hybrid, a traditional hybrid, and an extended-range model. Will that be enough to revamp Nissan and save it from its impending doom? Only time will tell.
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Drew Blankenship is a former Porsche technician who writes and develops content full-time. He lives in North Carolina, where he enjoys spending time with his wife and two children. While Drew no longer gets his hands dirty modifying Porsches, he still loves motorsport and avidly watches Formula 1.