Nissan to cut 11,000 jobs, close seven plants

Nissan Motor is making bold moves to save costs and turn around its struggling business.

The Japanese automaker announced on Tuesday that it would cut an additional 11,000 jobs and close seven plants, marking the latest chapter in its ongoing financial troubles.

This decision comes after a turbulent year, as Nissan faces plummeting profits, shrinking sales in key markets like the US and China, and intense competition from rising Chinese electric vehicle makers.

For the fiscal year ending in March, Nissan's operating profit fell drastically, dropping 88% to just 69.8 billion yen ($472 million).

In light of this, the company has refrained from offering projections for the new financial year.

Merger talks with Honda collapsed earlier this year, and Nissan's new CEO, Ivan Espinosa, is now steering the company toward a painful but necessary restructuring to regain its footing.

Espinosa aims to cut 500 billion yen in costs and streamline operations, with a sharp focus on reducing the complexity of parts by 70%.

"Our full-year financial results are a wake-up call. The reality is very clear. Our variable costs are rising. Our fixed costs are higher than our current revenue can support," Espinosa said in a press conference.

Alongside the job cuts, Nissan will also reduce the number of its production plants to just 10, down from 17, in hopes of simplifying its operations and driving down costs.

While Nissan has not disclosed which plants will be closed, analysts have noted that the company is still dealing with the aftermath of years under former chairman Carlos Ghosn, during which excessive focus on sales volume and heavy discounts led to an aging vehicle lineup.

Despite these aggressive steps, the road to recovery seems uncertain.

CFO Jeremie Papin has warned that the company is likely to report a 200 billion yen operating loss for the first quarter, signaling that the full impact of these changes may take time to materialize.