Nissan aims to cut costs by RM 12 billion as part of the restructuring plan

KUALA LUMPUR: For a while, we have been wondering what would be the repercussions of the Covid-19 pandemic on the world's major car manufacturers. As of the last two months, their production and sales are on halt or witnessed a nominal move. How would they be going to survive this phase? The two Cs - Coronavirus and Cost are really devastating for the industry at this point. 

So, just like other automakers, the Japanese car company, Nissan, is also restructuring its expenses. The automaker plans to cut US $2.8 billion (RM 12 billion) in annual fixed cost, as reported by Bloomberg. As the current situation braces for a drop in sales, which could complicate the firm’s recovery from years of poor profitability.

The cost-cutting initiatives are likely to be a part of a three-year plan that will be revealed along with financial results on May 28. According to an unnamed insider, Nissan would be taking more drastic measures to turn its business around. 

The measures will include dropping out of the Datsun brand, which has already taken an exit from Indonesia and will reduce expenses by curtailing marketing, research, and other costs. Furthermore, the firm will shut down another production line, which would bring the worldwide total to 13. Through this, the utilization ratio will be increased to 80% within three years as compared to 65% in the last fiscal year ended on March 31, 2020. However, it will reduce the annual production capacity to 5.4 million vehicles.

Earlier, it was reported that Nissan would focus more on the US, China, and Japan markets, whereas its alliance member, Renault will look after Europe. And the third member of the global automaking alliance, Mitsubishi, will cater to markets in Asia.

“Nissan will announce a revised midterm plan along with the fiscal year 2019 financial results on May 28. We do not have any further comments on this subject,” said Azusa Momose, a spokeswoman for Nissan.

The company has been facing a tough time, as it is still coping up with the Carlos Ghosn scandal on the one hand and struggling with the impact of the pandemic on the other.

Also read: Nissan Thailand extends factory shut down till May 31