Nissan reaches critical junction as a new report says the company has less than 12-14 months left to stay afloat.
A new report says that the end might be near for Nissan with the company reportedly having 12-14 months left.
Nissan is currently in the midst of a crisis, The Japanese auto giant has cut jobs, dealerships are selling vehicles at great losses, and production has slowed to a trickle. Things are so bad that the company even sold a third of its stake in Mitsubishi to try and get new operating capital. All of these measures were supposed to create a lifeline for Nissan to help it ride through these rough times.
A new report however suggests that these initiatives have all failed and that the automaker is living on borrowed time with some saying that the company has only 12-14 months remaining before it potentially goes belly up.
Nissan facing a collapse
Nissan executives are taking pay cuts as the company continues to try to turn around.
The report comes from the Financial Times with the publication citing an interview with two unnamed Nissan executives who said the company is living on borrowed time. “This is going to be tough. And in the end, we need Japan and the US to be generating cash,” they said. Nissan is now reportedly looking for a new long-term investor to replace some of Renault’s equity in the broader group with a large bank or investor being the preferred source of this newfound cash.
All options are also reportedly being considered including rival Honda taking a majority stake in the struggling company. That avenue appeared after the two companies signed a partnership agreement for EV development which planted the first seeds of cooperation between the two. Unnamed sources elsewhere in the company said that a potential expansion of the partnership between the two firms would “only be positive for French company Renault which is also looking to restructure elements of its 25-year alliance with the company.
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Nissan declines comment, but the signs are there
Nissan faced similar issues in the 1990s but an alliance with Renault and the leadership of former CEO Carlos Ghosn helped it escape disaster once. Can they do it again?
Nissan said in a statement that it’s not commenting on the validity of the report but there’s no denying that the company is navigating through rough waters. Slow sales already prompted the company to cut over 9,000 jobs earlier this month with production also being slashed by 20%. Nissan’s operating profit also plunged by 85% in the third quarter with the company posting a net loss of $60.1 billion. Despite these losses, Nissan is confident that it can recover and that changes instituted by some of its restructuring efforts will help save it over $3 billion.
It’s also important to note that this isn’t the first time the company has been in this predicament with similar financial turmoil in the 1990s forcing the company to enter an alliance with Renault with the help of former CEO (and now wanted fugitive) Carlos Ghosn. It remains to be seen what tricks the company has up its sleeve to escape these tough times but only time will tell.
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