Nissan in Big Trouble, Reports 90% Drop in Profits

Nissan, once a prominent force in the global automotive industry, is grappling with a profound financial crisis. The company recently reported a 90% drop in profits compared to last year, a dramatic decline that underscores the challenges it faces in an increasingly competitive and rapidly evolving market, as it rapidly transitions to EVs. China’s EV dominance is overpowering all automotive industry competitors. Nissan’s global sales fell 3.8% to 1.59 million vehicles for the first half of the financial year, largely due to a 14.3% drop in China.

In response to this downturn, Nissan has announced significant restructuring measures. The automaker plans to cut 9,000 jobs globally and reduce its manufacturing output by 20%. These actions are aimed at stabilizing the company’s operations as it contends with slumping sales and rising production costs. However, the impact of these decisions will likely be felt deeply, both within the company and across the broader industry.

The company’s lackluster performance in the EV industry was a likely culprit. In Kelley Blue Book’s Quarterly Sales of Electric Vehicles, Q3 2024, Nissan had a 2.4% market share. Not moving quickly enough with new battery electric vehicle (BEV) models probably hurt the company significantly.

The profit decline reflects a combination of factors. Nissan has struggled with declining sales in key markets, including North America and Europe, where shifting consumer preferences have outpaced the company’s ability to adapt. The automaker’s leadership has also been in turmoil, with the fallout from former chairman Carlos Ghosn’s legal troubles still casting a long shadow over its strategic direction. Additionally, the pressure to compete in the electric vehicle market has exposed gaps in Nissan’s readiness to align with the global push toward sustainability.

The decision to cut jobs and reduce manufacturing underscores the severity of the company’s challenges but also raises concerns about its ability to maintain competitiveness. For thousands of employees, the announcement signals an uncertain future. For the company, it may mean sacrificing some capacity to respond quickly to market demands, potentially putting it at a disadvantage against rivals that are ramping up production and innovation.

“The news from Nissan, it’s certainly not good when you hear about job losses you have to fear for workers,” said Peter Ireland, an economics professor at Boston College.

In a release, Nissan blamed the drop in revenue on model year transition, a lack of vehicle updates, an aging portfolio and a shift to hybrid vehicles, among a growing popularity of hybrids.

“Nissan’s biggest markets are China where they’ve experienced fierce competition with low-cost electric vehicles and then here in the United States where they’ve just had difficulty delivering popular vehicles in the market,” said Ireland.

Nissan’s Shrinking Wait Times Reflect Sluggish Demand Amid Profit Struggles

Nissan Motor’s struggle with weakening demand has become increasingly apparent, as waiting times for its cars in Japan fall significantly below those of its local competitors. While other major Japanese automakers face backlogs of six months or longer for new vehicle deliveries, Nissan’s most popular models are available within just one to two months.

This pattern is mirrored in the U.S., where inventory levels tell a similar story. In October, Nissan had an average supply of 109 days—well above the industry average of 85 days and far exceeding Toyota’s tight 35-day supply, according to Cox Automotive. These figures suggest that Nissan’s vehicles are not moving off dealership lots at the same pace as its rivals, raising concerns about customer demand.

The implications of these trends for Nissan are significant. High inventory levels and shorter wait times often indicate weaker sales, which could further strain the company’s already declining profits. Nissan’s recent announcement of a 90% profit drop underscores the urgency of the situation, as the automaker faces intensifying competition and shifting consumer preferences.

To turn things around, Nissan will need to address the root causes of its demand slowdown. Revamping its product lineup, doubling down on marketing efforts, and accelerating its push into electric vehicles could be key strategies.

Nissan Bets on Revival Amidst Financial Turmoil

Nissan has unveiled its plan to navigate through turbulent times following the announcement of a staggering 90% profit drop from the previous year. In a statement, the automaker emphasized its commitment to “implementing actions to ensure financial stability, reinforce our product lineup, and secure profitable growth.”

Central to Nissan’s strategy is the launch of a new line of vehicles, including the latest generation of the popular Nissan Murano. Production for the new Murano has already begun, signaling Nissan’s determination to rejuvenate its portfolio and reignite consumer interest. Known for its sleek design and dependable performance, the Murano has long been a cornerstone of Nissan’s lineup. The company is clearly betting that its updated version will appeal to both loyal customers and new buyers.

However, questions remain about whether this effort will be sufficient to address the deeper structural and strategic challenges Nissan faces. The automaker’s global job cuts and a 20% reduction in manufacturing signal the gravity of its financial woes, which cannot be resolved by new product launches alone. The automotive industry is undergoing a transformative shift, with electrification and advanced technologies reshaping consumer expectations and market dynamics.

While the new Murano represents a step forward, it remains to be seen whether it can provide the momentum needed to stabilize Nissan’s position in an increasingly competitive and evolving market. The coming months will reveal whether Nissan’s actions can drive the profitable growth it so urgently seeks—or whether deeper changes will be required.

Nissan Leaf and Ariya: Cornerstones of Nissan’s Electric Future

Nissan has long been a pioneer in electric vehicles (EVs), with the Nissan Leaf leading the charge as one of the first mass-market EVs. Since its launch in 2010, the Leaf has sold over 600,000 units globally, cementing its place as a key player in the EV revolution. Known for its affordability, practicality, and ease of use, the Leaf has appealed to eco-conscious consumers seeking an entry into electric mobility. The model’s latest iterations have improved on range and technology, with some versions offering up to 226 miles on a single charge. In Kelley Blue Book’s Quarterly Sales of Electric Vehicles, Q3 2024, the Leaf had a weak 0.8% market share. The Leaf uses the outdated and hard to find CHAdeMO charging standard, however an adapter to CCS is available.

Building on the Leaf’s legacy, Nissan introduced the Ariya, its flagship electric SUV, in 2021. Designed to showcase the automaker’s advanced EV platform and ambitious electrification strategy, the Ariya blends modern aesthetics with cutting-edge technology. With a range of up to 304 miles, a spacious interior, and features like ProPILOT Assist 2.0 for semi-autonomous driving, the Ariya is positioned to compete with premium EVs in the growing crossover market. In Kelley Blue Book’s Quarterly Sales of Electric Vehicles, Q3 2024, the Ariya had a paltry 1.6% market share. The Nissan Ariya uses two charging standards for its inlets – Type 2 and CCS.

The Ariya also represents Nissan’s commitment to electrification under its Ambition 2030 initiative, which aims to make EVs a more significant part of its global portfolio. As EV adoption grows, Nissan is counting on models like the Leaf and Ariya to maintain its position as a leader in sustainable transportation.

However, challenges remain. The EV market is increasingly competitive, with rivals like GM, Hyundai, and Volkswagen pushing aggressive innovation and marketing strategies. For the Leaf, staying relevant in a market moving toward longer-range and faster-charging vehicles will be crucial. For the Ariya, establishing itself in the premium EV segment will require Nissan to deliver on both performance and customer experience.

The Road Forward

Despite the bleak outlook, there are opportunities for recovery if Nissan can make bold and timely moves. The automotive industry is shifting toward electrification and sustainability, offering a chance for Nissan to reinvest in fully electric innovation and reclaim its relevance in the market. Stabilizing its leadership and rebuilding trust with consumers and investors will also be critical as the company charts its path forward.

The coming years will be pivotal for Nissan. While the challenges it faces are significant, the potential for reinvention remains. With the right strategy, this iconic brand could overcome its current struggles and reestablish itself as a leader in the automotive world.