Key Points:
- Nissan posted a massive $3.4 billion net loss for the fiscal year ending in March.
- The automaker plans to cut 20,000 global jobs and close seven manufacturing plants by 2027.
- American trade tariffs cost the Japanese car company 286 billion yen in operating profit.
- Nissan will add autonomous driving technology powered by artificial intelligence to 90 percent of its future vehicles.
Japanese automaker Nissan Motor Company announced a massive financial blow on Wednesday. The company reported a net loss of 533.10 billion yen, roughly $3.4 billion, for the fiscal year that ended in March. This huge deficit marks the second consecutive year that the car manufacturer has finished deep in the red. The massive loss primarily stems from heavy restructuring costs as the company desperately tries to turn its fortunes around.
While the numbers look grim, they actually show a slight improvement from the previous year. A year earlier, Nissan logged an even larger net loss of 670.90 billion yen. However, the company still struggles to move enough metal off dealership lots. Global vehicle sales dropped 5.8 percent, bringing the total down to just 3.15 million units for the entire business year. Overall revenue also slipped, with sales falling 4.9 percent to hit 12.01 trillion yen.
The United States market, traditionally a strong source of revenue for Nissan, showed noticeable weakness. American car sales fell 3.4 percent, landing at 906,000 units for the year. Despite the drop in car sales and the massive overall net loss, the company posted a positive operating profit. Nissan recorded an operating profit of 58.01 billion yen. While this figure represents a 16.9 percent drop from the prior year, it perfectly matched the most recent internal estimates.
Earlier in the year, executives painted a much darker picture. They originally projected an operating loss of 60 billion yen. They revised that estimate in late April after seeing some positive market changes. The company made faster-than-expected progress in its internal reform efforts. A weaker Japanese yen also helped boost the value of overseas profits. Finally, the automaker secured one-time financial gains thanks to recent changes in United States emissions regulations.
Political changes in Washington also created severe financial hurdles for the Japanese automaker. United States President Donald Trump imposed a steep 27.5 percent tariff on cars imported from Japan in April of last year. This sudden move represented a massive jump from the previous 2.5 percent tax rate. Negotiators eventually talked the rate down to 15 percent in July, and customs officials formally implemented the new rule in September.
These political trade battles took a heavy toll on the corporate bank account. Nissan stated that the direct impact of the new American tariffs cost the company 286 billion yen in operating profit over the past year. This massive financial hit actually exceeded their earlier predictions, which had estimated the tariff damage at around 275 billion yen. The extra costs forced the company to take aggressive action to survive.
To stop the financial bleeding, Nissan is pushing forward with brutal streamlining efforts to restore overall profitability. The executive team made the difficult decision to close seven vehicle manufacturing plants in Japan and overseas. This massive shrinking process comes with a high human cost. The automaker plans to cut a total of 20,000 jobs across its global workforce by the end of fiscal year 2027.
As part of its survival strategy, the company plans to reduce its overall vehicle catalog. Executives outlined a clear plan to reduce the total model lineup by 20 percent. Instead of trying to sell every type of car in every country, Nissan will concentrate its energy and money on three core markets. Going forward, the company will focus almost exclusively on expanding its sales footprint in Japan, the United States, and China.
To attract new buyers in these core markets, Nissan wants to lead the industry in advanced technology. The company announced in April that it plans to add sophisticated autonomous driving systems to 90 percent of its future vehicle models. These new self-driving features will rely heavily on artificial intelligence. Executives hope this massive push into smart vehicle technology will help revive sluggish sales and bring customers back to Nissan showrooms.
Despite two brutal years, the leadership team expects a solid financial turnaround. For the current business year, which runs through next March, the company confidently forecasts a net profit of 20 billion yen. They also expect their operating profit to jump 3.4-fold, reaching 200 billion yen. To achieve these goals, Nissan projects total sales will grow 8.3 percent, bringing total revenue up to a healthy 13 trillion yen.
