Japanese automaker Nissan Motor Co is reportedly set on unveiling a three-year cost-cutting plan that will save the company around 300 billion yen, or roughly $2.8 billion, in annual fixed costs and charges. The company is implementing the drastic measures to help it better handle the continued disruptions caused by the coronavirus pandemic.
According to reports citing sources with knowledge in the matter, Nissan will be unveiling the measure during its upcoming earnings report scheduled on May 28. While details regarding the cost-cutting plan have yet to be officially confirmed, sources claim that it will likely involve the scrapping of the company's Datsun brand and the shutdown of a number of manufacturing facilities.
It is not yet clear which of the company's production lines will be shut down, but sources claim that it plans to bring its worldwide total to about 13 facilities. The company aims to increase its utilization ratio to about 80 percent within the next three years while maintaining its annual output capacity of about 5.4 million vehicles.
The measures are aimed at turning the company around amid its continued underwhelming performance due to the pandemic and the recent scandal involving its former chairman, Carlos Ghosn. Apart from shutting down some of its production facilities, on top of the recent closure of its operations in Indonesia, Nissan is reportedly planning to cut its marketing and research costs in order to hit its reduced spending targets for 2020.
Since 2018, the outlook for the company growth has remained bleak, particularly due to the management paralysis after Ghosn's arrest and its aging car lineup. The situation was further worsened by the pandemic, which forced the company to shut down its showrooms and production facilities in major markets. This heavily depressed its vehicle sales, with the company previously stating that it expects to report a loss for its latest fiscal year.
The proposed cost-cutting measure reportedly still needs to be reviewed by the company's board of directors, which means that it may still be subject to change. Executives will reportedly still need to adjust the scale of the restructuring plan depending on the needs of the company to sustain its profitability.
For its fiscal year ending in March 2020, Nissan had forecasted a possible 12 percent decline in its car sales to about 10.2 trillion yen. The proposed plan reportedly aims to bring that number up to at least 11.5 trillion yen within the next three years.
