Nissan Cutting Up To 10,000 Jobs As First-Quarter Profits Tumble 90%

Nissan, struggling in the wake the ouster of former CEO Carlos Ghosn and weaker profits, will lay off up to 10,000 workers, or 7% of its global workforce, according to Japanese media reports.

News of the job cuts comes as the Japanese automaker warned that its first-quarter profit plunged about 90% from a year earlier. The full quarterly financial statement will be released Thursday.

Reuters also reported that the layoffs are part of a broader turnaround plan that company executives will outline later this year.

While a Nissan spokesman declined to comment on the latest job cuts, the company indicated that a Nikkei news report of the 90% earnings decline was “broadly accurate.” It would be one of Nissan’s worst financial quarters in the last decade.

The layoffs reportedly include a job cut of 4,800 the company disclosed in May. The cuts will be concentrated at plants outside Japan, including the United States, India and Brazil, that are running well below their production capacity.

Nissan’s performance in the U.S. has weakened after years of trying to grow market share by aggressively discounting prices on certain models.

As with many of its competitors, Nissan has seen sales of its sedans, such as the Sentra, Altima and Maxima, decline significantly as consumers migrate to sport-utility and crossover-type vehicles.

But even sales of Nissan’s crossover models such as the Rogue and Murano, are running well below year-ago levels.

“Deteriorating performance in the United States is a big issue that we’re facing,” Motoo Nagai, chairman of Nissan’s audit committee, said on Wednesday. “For a long time we were concerned with increasing volume. We were chasing numbers. Now it’s time to enhance the brand.”

The troubles come in the wake of a controversy that began in late 2018 when Japanese authorities arrested Ghosn on charges that he enriched himself at the company’s expense by about $5 million. Nissan is charged with underreporting Ghosn’s compensation by 9.1 billion yen, or about $85 million, over about 10 years.

Nissan fired Ghosn as chairman last November.

Ghosn, who led Nissan and its alliance with French automaker Renault for nearly 20 years, has denied he did anything improper and that he is a victim of corporate back-stabbing as the once-harmonious alliance became fractious. He is awaiting trial.

After Renault rejected a proposed merger with Fiat Chrysler Automobiles in June, Renault and Nissan have tried to reconcile.

Last month, Nissan shareholders approved measures aimed at repairing the strained alliance. Renault owns 43% of Nissan, but the Japanese automaker had resisted giving more power to its French partner.

At their annual meeting, also in June, Nissan shareholders voted to re-elect CEO Hiroto Saikawa to its board of directors.

Saikawa pledged to lead an overhaul of the automaker’s corporate governance structure, including establishing new board committees for nominations and compensation.

But it’s unclear how long Saikawa will be in charge of the turnaround effort.

The company’s board is looking at potential new CEOs to succeed Saikawa, according to Masakazu Toyoda, Nissan’s lead external director who chairs the nomination committee who spoke to reporters Wednesday.