Nissan, the iconic Japanese automaker, is facing a critical juncture, with industry experts predicting a bleak future for the company unless a significant turnaround occurs within the next 12 to 14 months.
The company recently acknowledged its dire financial straits, reporting a staggering 93% plunge in profits compared to the previous year. This alarming decline, coupled with plans to slash 9,000 jobs, paints a grim picture of Nissan’s current state.
While declining sales in key markets like North America and china have contributed to nissan’s woes, analysts point to a more essential strategic misstep as the root cause of the company’s troubles.
“The real reasons” for Nissan’s struggles, according to Reuters, lie in a misguided decision made by CEO Makoto Uchida several years ago. Uchida opted to focus the company’s resources on “pure” electric vehicles, abandoning the production of hybrid models. This proved to be a costly error, as hybrid vehicles have consistently proven more appealing to consumers than their fully electric counterparts.
“Such a miscalculation can cost Uchida his position,” analysts warn, adding that Nissan now faces a desperate fight for survival. The company has a limited window of chance, with experts estimating it has only one year to extricate itself from this crisis.
Uchida’s decision to prioritize electric vehicles left a gaping hole in Nissan’s US lineup, a market crucial to the company’s success. “The management of the Japanese company did not expect that the demand for gasoline-electric cars will continue to grow at a high speed,” Uchida admitted, acknowledging his misjudgment.
Compounding Nissan’s financial woes is a recent move by Renault, its longtime partner, to reduce its stake in the company from 46% to 40%. This has left Nissan scrambling to secure a new long-term investor, possibly a bank or a large insurance group, to fill the void left by Renault.
Nissan is exploring all available options, including a potential partnership with Honda (and Mitsubishi), with whom it is already collaborating on a new electric vehicle project. Speculation is rife that Renault could sell some of its remaining shares to Honda, potentially paving the way for the Japanese automaker to take control of Nissan and other smaller manufacturers in the future.
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