Nissan in Crisis: Is Honda the Key to Its Survival?

Nissan is teetering on the brink of bankruptcy, with only 12 to 14 months left to avoid a financial collapse, according to a senior company official. In what is arguably the most perilous moment for the automaker since Carlos Ghosn’s arrival in 1999—when he famously turned around a nearly bankrupt Nissan—the company is now facing an unprecedented crisis. Amid this turmoil, Nissan recently revealed plans to cut 9,000 jobs globally, reduce production capacity by 25%, and completely overhaul its product lineup.

The company’s difficulties have been mounting ever since the arrest of its former CEO Carlos Ghosn in November 2018, a scandal that tarnished Nissan’s reputation and halted its progress. Ghosn was arrested on charges of breach of trust and misappropriating company funds, a shocking event that disrupted the automaker’s leadership and business strategy. Fast forward to the present, and Nissan’s profits have plummeted, with estimates predicting they will be 70% lower than expected this year. In the previous quarter, the company reported a staggering $60 million loss.

To address its growing financial crisis, Nissan has announced several drastic measures. The company is slashing jobs and production to save $3 billion, and it has even sold off a significant portion of its stake in Mitsubishi Motors, reducing its holding from 34% to under 25%. Nissan has also distanced itself from its longtime partner, Renault, as it tries to navigate its way out of financial trouble. In a striking move, CEO Makoto Uchida has voluntarily taken a 50% pay cut to demonstrate his commitment to the company’s survival.

At a press conference in early November, Nissan’s head of manufacturing, Hideyuki Sakamoto, outlined the company’s strategy to reduce production costs. “We currently operate 25 vehicle production lines globally, and we plan to reduce their maximum operational capacity by 20%. One way to achieve this is by adjusting line speeds and shift patterns to increase the efficiency of our workforce,” Sakamoto explained. While these steps are meant to streamline operations and cut expenses, it remains to be seen whether they will be enough to stabilize the company.

The underlying cause of Nissan’s struggles lies in its product lineup and its inability to keep pace with the electrification shift in the automotive industry. Nissan has been slow to revamp its vehicle offerings, and its current models are not resonating with consumers. Despite having two electric vehicles (EVs) on the market, the company’s future plans for electrification have stalled. Furthermore, a new wave of cheaper Chinese EV alternatives is flooding the global market, significantly eroding Nissan’s market share. The company’s e-Power hybrid powertrain, which gained traction in Japan, has yet to be introduced in the crucial U.S. market, leaving Nissan at a competitive disadvantage.

However, it’s not all bad news for Nissan. In the U.S., the company’s locally produced Rogue compact SUV has become a top-seller, with more than 189,000 units sold as of September 2024. Meanwhile, in Europe, the Nissan Qashqai and Juke remain popular, consistently ranking among the top-selling vehicles in the region. The Qashqai, in particular, was the best-selling vehicle in the UK in 2022. These successes prove that Nissan has the capability to produce best-selling models, but the company needs to focus on creating a broader range of vehicles that match the appeal and innovation of the Qashqai and Rogue.

Despite these positive signs, Nissan’s financial outlook remains grim. According to the Financial Times, the company is desperately seeking an anchor investor to help it navigate this critical year. Rumors have surfaced that Nissan is in talks with Honda, hoping to secure a deal where the latter would buy a portion of Nissan’s shares. This partnership would build upon the recent agreement between the two companies to collaborate on electric vehicle development. While such a deal could potentially provide some financial relief, it is clear that Nissan needs a comprehensive strategy to revitalize its business.

This need for a strategic overhaul comes just eight months after CEO Uchida unveiled a new business plan, dubbed The Arc, which aimed to increase global sales by 1 million units, bringing the total to 4.4 million vehicles. However, Nissan has since slashed its global sales forecast for the current fiscal year, with a revised target of 3.5 million vehicles, signaling that The Arc has failed to deliver the expected results.

The situation at Nissan has become so dire that senior fellows at research institutes are expressing deep concern. Sanshiro Fukao, a senior fellow at the Itochu Research Institute, remarked, “If I were an employee of Nissan today, I would be too embarrassed to tell my children and parents about my company. I feel sorry for everyone involved with Nissan.” Such harsh criticism underscores the severity of the company’s crisis.

With so many challenges facing the company, the question remains: Can Nissan survive this tumultuous period and make the necessary changes to avoid collapse? The road ahead is uncertain, but with the right moves, including potential collaboration with Honda, the company might yet find a way to turn things around. Nissan’s ability to rebound from this crisis will depend on its ability to innovate and adapt in an increasingly competitive and electrified automotive landscape. For now, all eyes are on Nissan as it navigates these troubled waters, with the fate of the company hanging in the balance.