Nissan Motor Co., Japan's third- largest automaker, said it will cut 20,000 jobs or 8.5 per cent of its workforce and post its first loss in nine years as the global recession cripples car demand and a stronger yen ravages the value of overseas earnings.
Nissan expects a net loss of 265 billion yen ($2.91 billion) for the year ending 31 March, compared with its October estimate of 160 billion yen in net income. It also scrapped its second-half dividend. The Japanese carmaker, 44.3 per cent owned by French auto manufacturer Renault SA, also headed by Ghosn, posted a net loss of 83.2 billion yen for the three months ended December.
The company's January sales in the US, its biggest market, plunged 31 per cent as demand for Altima sedans and Xterra sport-utility vehicles dried up. Nissan sold 731,000 vehicles worldwide in the quarter ending 31 December, down 18.6 per cent from the same period a year earlier. Nissan's workforce reduction caps an earnings season in which all of Japan's carmakers slashed forecasts (See: Japanese auto makers cut back on production, reduce workforce) and other majors Sony Corp, Panasonic Corp (See: Panasonic plans to close 27 plants, cut 15,000 jobs) and NEC Corp (See: Japanese major NEC to slash 20,000 positions) cut workers.
Like other Japanese automakers, Nissan has been battered by the global slump and the US credit crunch, which has undermined sales in its vital North American market. A strong yen also ate into profits by eroding overseas earnings when converted back to yen.
Car sales in the US have sunk to the lowest level since the early 1980s amid the highest unemployment since 1992, forcing General Motors Corp. and Chrysler LLC to seek government aid. Industrywide sales in Japan fell the most in 35 years last month. The country is headed for its worst postwar recession as factory output slumped an unprecedented 9.6 per cent in December and unemployment surged.
''The global auto industry is in turmoil, and Nissan is no exception….Our worst assumptions on the state of the global economy have been met or exceeded,'' said Nissan CEO Carlos Ghosn. Declining consumer confidence and lack of access to credit are ''the most damaging factors,'' he said.
As one key step in response to the dismal results, Ghosn said Nissan's global work force would be reduced by 20,000 through March 2010, to 215,000 from 235,000. Directors on the board will forego bonus pay for the year ending March. Their salaries, as well as the salaries of corporate officers, will be reduced by 10 per cent, while managers' salaries will be reduced by 5 per cent, the company said.
Toyota Motor Corp., the world's largest automaker, last week said its loss would be three times earlier estimates (See: Toyota makes first annual loss in seven decades). Honda Motor Co., Japan's second-largest carmaker, slashed its full-year net income forecast 57 per cent 80 billion yen on 30 January, compared with a previous estimate of 185 billion yen (See: Numbers dented, Honda reduces profit forecast). Mazda Motor Corp., Mitsubishi Motors Corp (See: Mitsubishi to report annual loss; opts out of motorsports) and Fuji Heavy Industries Ltd. have also forecast full-year losses.
Ghosn has called for government aid for carmakers. The company may apply to Japan's government for low-interest loans as sales in its home market collapse.
Nissan fell 5.8 per cent to 261 yen at the close of trading in Tokyo before the earnings announcement.
The company is cutting Japan production by an additional 64,000 vehicles in February and March, it said 15 January. With the reduction, Nissan's domestic production will total about 1.1 million vehicles for the year ending 31 March, down 289,000 units, or 21 per cent from its original plan in May. In the US, Nissan is operating auto-assembly plants on a four-day workweek indefinitely and plans to eliminate about 110 jobs as it adjusts regional sales, marketing and design operations.