Posted on Apr. 28, 2020, 4:30 p.m.
Legally forced to inform the Tokyo Stock Exchange of the sudden deterioration in its performance, Nissan’s communications department improvised an unnecessarily convoluted statement on Tuesday to avoid letting go of the taboo word “losses”.
However, the Japanese group and major partner of Renault is well on the point of announcing that it has ended its fiscal year in the red for the first time since the financial crisis of 2008-2009. A rout that will automatically weigh on the income of the French manufacturer, its main shareholder.
Six-digit loss
For the financial year from April 2019 to March 2020, Nissan, which will not present final and detailed results until the end of May, would have, according to its first calculations, generated an operating loss close to 40 billion yen, or 340 million euros. Its net loss could reach 95 billion yen (820 million euros).
Without going into details, Nissan explains that its revenues, already fragile in 2019, have suffered, since the beginning of 2020, from the Covid-19 pandemic which weighed on its sales of cars, spare parts but also weighed on its fundraising activities. The group is also financially penalized by the drop in its revenues in its subsidiaries and in Mitsubishi Motors, in which it owns 34%. The small Japanese manufacturer had itself revealed last week that it estimated it had generated a loss of 26 billion yen (220 million euros) in its last annual exercise.
Like all mid-range brands, Mitsubishi Motors and Nissan have suffered since the start of the pandemic from a collapse in sales in countries that have entered containment. In March, Nissan sold only 315,000 vehicles worldwide. Last year, in the same month, it distributed almost twice as much. The brand plunges into all markets except the mini-car segment in Japan, which jumped surprisingly by 15% in March. Over the twelve months of the fiscal year, its sales will have declined in total by 13.2% to fall to 4.8 million vehicles.
World depression
If the decline is brutal, it remains in line with the performance of other large generalist brands. Honda, for example, saw sales also decline 43% in March, year-over-year. At Toyota, this decline was measured at 24%. Pointing to this overall depression in the market, Nissan executives note that the manufacturer’s market share has not, in the end, not significantly declined despite the accumulation of setbacks within the company which experienced the repercussions of the case. Carlos Ghosn, bickering with its partner Renault then the replacement of almost all of its management teams.
This diagnosis risks reassuring the group in its desire to tackle, above all, its profitability problems. Plancher for months on a review of its major restructuring plan , the management led by Makoto Uchida, its CEO, and Ashwani Gupta, its number two, notably want to lower fixed costs by drastically reducing its production capacities and its number of employees. Last year, even before the coronavirus crisis, the group, which does not suffer from liquidity problems, had planned a reduction of 10% of its global workforce, that is to say the reduction of 12,500 positions.
Patent overcapacities
After having followed for years an aggressive strategy of expansion, designed by Carlos Ghosn, Nissan now intends to set more realistic growth targets, in a global automobile market which has not grown since its peak in 2017. While it has factories capable, on paper, of producing 7 million cars per year, the group actually only assembles 5 million and has no illusions about its ability to quickly exceed these volumes.
At the end of May, when it will unveil its weight loss program, the manufacturer should therefore detail the markets where it will close assembly lines and those where it will delegate its production or even its distribution to its partners Renault and Mitsubishi Motors, with which it also intends to multiply co-development projects.