In a surprising turn of events, shares of Nissan Motor Co. soared by 5.5% on Tuesday following reports that the struggling automaker is planning to lay off an additional 10,000 workers. The news comes as part of the company’s ongoing efforts to stabilize its finances and revitalize its business amid mounting losses.
The Japanese carmaker, one of the top 10 automakers globally by unit sales, is expected to announce a record annual loss of approximately $5 billion later today. The anticipated loss adds to a series of financial setbacks for Nissan, which has been grappling with increasing debt levels and declining market share.
Nissan, which has been working hard to recover from the fallout of a failed merger attempt with Honda earlier this year, has declined to comment on the job-cut reports, which were initially published by local media outlets, including Japan’s public broadcaster NHK. According to the reports, the company aims to reduce its global workforce by approximately 15%, building on previous plans announced in November to cut 9,000 jobs.
The company is facing increasing competition from Chinese electric vehicle (EV) manufacturers, which has strained its efforts to retain its position in the market. Additionally, trade tariffs imposed by the United States have further threatened its profits, with a 25% tariff on all imported vehicles affecting Nissan more severely than its rivals.
Earlier in the year, the Japanese carmaker was in talks with Honda about a potential merger, which had been seen as a potential lifeline for the company. However, those discussions collapsed in February after Honda proposed making Nissan a subsidiary rather than creating a shared holding firm.
The automaker’s challenges have not been limited to financial issues. Nissan has also struggled with a tarnished reputation following the 2018 arrest of former CEO Carlos Ghosn, who later escaped Japan under dramatic circumstances.
This year, Nissan’s shares have plummeted nearly 40%, prompting the company to appoint a new CEO in March. Despite this, the company has seen its credit rating downgraded to junk status by agencies such as Moody’s, citing its weak profitability and an aging model portfolio.
Adding to the pressure, Nissan recently shelved plans to build a $1 billion battery plant in southern Japan, citing a difficult business environment. Bloomberg Intelligence analyst Tatsuo Yoshida noted that the company, unlike its competitors Toyota and Honda, may struggle to pass on the costs of U.S. tariffs to consumers due to its traditionally more price-sensitive clientele.
As Nissan braces for its full-year financial report later today, the company faces an uphill battle to regain stability in a highly competitive and challenging global market.
