- Aims for positive operating profitability and free cash flow in the automotive business by FY 2026
- Achieve total cost savings of 500 billion yen vs FY24 actuals in fixed and variable costs
- Reduce workforce by 20,000 and plants from 17 to 10 by FY 2027
Nissan Motor Co., Ltd. announced Re:Nissan, a recovery plan that implements decisive and bold actions to enhance performance and create a leaner, more resilient business that adapts quickly to market changes. With a fresh focus under new management, Nissan is reassessing its targets and has conducted a comprehensive review of key initiatives, introducing further measures to ensure a strong recovery.
Nissan president and CEO Ivan Espinosa said: “In the face of challenging FY24 performance and rising variable costs, compounded by an uncertain environment, we must prioritize self-improvement with greater urgency and speed, aiming for profitability that relies less on volume. As new management, we are taking a prudent approach to reassess our targets and actively seek every possible opportunity to implement and ensure a robust recovery. Re:Nissan is an action-based recovery plan clearly outlines what we need to do now. All employees are committed to working together as a team to implement this plan, with the goal of returning to profitability by fiscal year 2026.”
With Re:Nissan, the company targets a total cost savings of 500 billion yen versus fiscal year 24 actuals in fixed and variable cost savings. These savings will establish a framework to secure operating profitability and free cash flow in the automotive business by fiscal year 2026.
Variable cost reduction: In the new plan, Nissan has set an aggressive cost reduction target of 250 billion yen. To achieve this, the company is accelerating engineering and cost efficiencies while implementing a rigorous governance model. A dedicated cross-functional transformation office under Chief TdC* Officer staffed by around 300 experts, has been established and is empowered to make cost decisions.
Additionally, Nissan will temporarily pause advanced and post-FY26 product activities to mobilize 3,000 people to focus on cost reduction initiatives. This reprioritization was made possible through the company’s swift implementation of a shortened development process that reduces lead time and ensures no delays in product launches.
A key aspect of this transformation involves rethinking the supply chain; Nissan will restructure its supplier panel to secure more volume for fewer suppliers, eliminating inefficiencies and challenging legacy standards.
Fixed cost reduction: While maintaining a strong focus on variable costs, Nissan will continue to seek additional opportunities to reduce fixed costs, targeting a total reduction of 250 billion yen by FY26 compared to its FY24 actuals.
Restructuring manufacturing base and refine efficiencies: Nissan will consolidate its vehicle production plants from 17 to 10 by fiscal year 2027. Additionally, the company will streamline its powertrain plants and accelerate job reformation, work shift adjustments, and capital expenditure reductions, including the cancellation of the planned Lithium Iron Phosphate battery plant in Kyushu.
Reduction of workforce: Nissan aims to reduce its workforce by a total of 20,000 employees between fiscal years 2024 and 2027, which includes the previously announced reduction of 9,000. This workforce reduction globally covers direct/ indirect roles and contractual roles in manufacturing, SG&A and R&D functions. Additionally, Nissan will implement further measures under SG&A, including expanding the scope of shared services and identifying efficiencies in marketing.
Revamp Development: Nissan is revamping its development processes by reducing engineering costs, complexity, and improving development speed. Through various initiatives such as rationalizing global R&D facilities and allocating work to competitive locations, Nissan aims to reduce the workforce’s average cost per hour by 20%.
Nissan will reduce parts complexity by 70%, while the integration and optimization of platforms will decrease the number of platforms from 13 to 7 by fiscal year 2035. The company will advance its efforts to significantly shorten the development lead time of the first vehicle to 37 months and subsequent family vehicles to 30 months. Models developed under this process include the all-new Nissan Skyline, the all-new global C SUV, and the all-new INFINITI compact SUV.
Redefined market & product strategy: Nissan redefined its market approach to better match local customer needs and tailor product strategy to align with the updated market approach. This will enable Nissan to focus on internal engineering resources in core businesses to ensure growth while securing profit.
Nissan is reshaping its product strategy to be more market-focused and more brand-oriented. Commitment to innovation will accelerate, bringing exciting advancements to valued customers. It will be centered around signature Nissan models that deliver strong nameplates which represent the heartbeat of Nissan globally, volume-driving models that will be the key drivers of the company’s performance and growth.
The market-specific approach will be positioning the U.S., Japan, China, Europe, Middle East and Mexico as key markets and adopt a customized approach to other markets. In the U.S., it includes addressing rapidly expanding segments such as hybrids and revitalizing the INFINITI brand through synergies with the Nissan brand. In Japan, expansion of model coverage will contribute to reinforcing the brand in its home market. The approach in China will focus on enhancing domestic performance with NEVs. Also exports from China will support catering to diverse and global needs. In Europe, the focus will be on B and C segment SUVs. Nissan will leverage partnerships with the Renault Group and partners from China to further diversify offerings. In the Middle East, the company will focus on large SUVs while exploring products from China to enhance competitive offerings. Mexico will continue to serve as an important export hub, contributing significantly to profit and growth.
Reinforce Partnerships: Nissan will collaborate with partners to deliver models that complement its portfolio and meet unique market needs. Several projects with its alliance partners, Renault and Mitsubishi Motors (MMC) are underway, including the recently announced initiative for an all-new battery electric vehicle (BEV) based on the next-generation LEAF for MMC’s North American market. Nissan and Honda will continue their collaboration in vehicle intelligence and electrification.
Re:Nissan clarifies the necessary steps to recover performance and establishes clear timelines following a comprehensive review of the company’s current situation. Although the targets are ambitious, the strategies and actions are well-defined. Nissan remains committed to the steady implementation of this plan to recover performance.
