The drama surrounding Nissan over the past several months is more than just bad publicity. The arrest of former CEO Carlos Ghosn is part and parcel of the brand's current situation and plummeting sales. The brand just published its 1st-quarter results for the 2019 fiscal year, and things are just bad all over. To add insult to injury, big layoffs are coming.
To put it in terms of numbers, from April to June 2019, Nissan’s net income experienced a precipitous drop of 94.5 percent down to $59 million, and operating profit dropped to $14 million. According to Nissan, these numbers were the result of a decrease in revenues, along with other factors such as the cost of raw material, exchange rate fluctuations, and other investments made to comply with new regulations.
As most folks know, the former CEO of Nissan and Mistubishi, Carlos Ghosn, was arrested in November of last year on allegations that he under-reported his earnings ($70 million in deferred compensation) and misuse of company assets. He's currently under house arrest in Tokyo and suing Nissan and Mitsubishi for breach of contract. We'll see how that goes.
But it's more than just that. Sales are down in every market except for China. The result will be huge layoffs to the tune of 12,500 jobs globally (mostly factory workers). About 6,400 job are already in the process of being eliminated at eight locations worldwide and will continue through March 31, 2020. 1,420 of these will be in America. The rest will be cut in global locations by March 31, 2023.
In order to survive, Nissan's plan is to reduce production capacity globally by ten percent, as well as reduce its model line by ten percent, all by the end of the 2022 fiscal year. They stated that their plans are focusing on investment in "global core models and strategic regional models.” This pretty much means they'll keep what sells and ditch what doesn't. Our dreams of seeing a new Frontier pickup might get dashed to pieces.
The news is obviously crappy for Nissan workers, and the brand has been struggling with sales even before the Ghosn drama. We'll see how things play out in the coming months. Nissan has to get their ship righted quickly, and it looks like no easy task.