Nissan Motor Co., Ltd., Japan's second largest car maker, revealed a massive $6.2 billion loss in its fiscal year ending March -- its largest in 11 years. The huge downturn has convinced Nissan to accelerate its strategy of becoming a smaller, more cost-efficient car maker in a more determined effort to restore profitability.
On Thursday, Nissan also reported an operating loss of $376 million for the past fiscal year compared to an operating profit of $2.9 billion year-on-year. It also booked $5.6 billion in restructuring costs and impairment losses.
Nissan unveiled a four-year roadmap to a leaner and more profitable future. It said it will no longer chase global market share at all costs, a goal it blames for its massive financial and market losses of the past years. The strategy will also allow Nissan to share production globally with its partners Groupe Renault and Mitsubishi Motors Corporation.
Nissan has been part of the Renault-Nissan-Mitsubishi Alliance, the world's fourth largest car maker, since 1999.
Under the new, four-year plan, Nissan will slash its production capacity and reduce its model range to 55 from 69 to slash $2.8 billion (300 billion yen) from fixed costs. It will also shutter production plants in Spain and Indonesia. The company will abandon South Korea and pull-out its Datsun brand from Russia.
CEO Makoto Uchida said improving cash flow is Nissan's biggest challenge. He said his priority is to make every effort to return Nissan to a profitable growth path.
Uchida pledged a return to profitability. His goal is a core operating profit margin above 5% and a sustainable global market share of 6%.
The four-year plan crafted by Uchida and Chief Operating Officer Ashwani Gupta will see Nissan reduce annual global sales to some five million units. This is a million units fewer than the total targeted by former CEO Carlos Ghosn, who Nissan had arrested in 2018 on financial misconduct charges. Ghosn escaped from house arrest in Tokyo in January and is now in hiding in Lebanon.
Analysts said Ghosn's relentless pursuit of global market share, especially in the United States, led to over production and much too heavy discounting while cheapening the brand's image.
Uchida said Nissan must admit failures and take corrective actions. He also wants Nissan's leaders to not blindly focus on Nissan's corporate culture alone, which he said had made the company's relationship with Groupe Renault more difficult than it should be.
Nissan sold 4.9 million vehicles in 2019 compared to an earlier estimate of 4.8 million. The 2019 sales number is 11% lower than 2018 but meant Nissan kept its rank as Japan's second biggest carmaker after Toyota Motor Corporation.