Nissan Bleeds $5.26 Billion in Losses: Why The Japanese Automaker Is Struggling to Restructure

Japanese automaker Nissan has shown signs of struggle lately this year. It recently reported that it expects to post a record net loss of between £3.69 billion and £3.95 billion ($4.91 billion to $5.26 billion) for the financial year ending in March, citing impairment charges tied to its ongoing restructuring efforts amid continued struggles. Said struggles follow the recent postponement of the Nissan-Honda merger, with the former refusing to be a subsidiary of one of its strongest competitors on a grander, global scale.

Impairments and Restructuring

It is worth noting that Nissan has revised its fiscal 2024 outlook, projecting a net loss of £3.66 billion to £3.92 billion (700–750 billion yen), mainly due to over £2.61 billion (500 billion yen) in asset impairments and more than 60 billion yen in restructuring costs tied to its ongoing turnaround strategy.

The automaker lowered its expected vehicle sales volume to 3.35 million units, citing a deteriorating sales environment and increased competition. Full-year net revenue is now forecast at £65.8 billion (12.6 trillion yen), with operating profit expected to reach 85 billion yen.

Despite the projected loss, Nissan maintains a strong financial position, ending the year with £7.83 billion (1.498 trillion yen) in net cash and total available liquidity of £17.7 billion (3.4 trillion yen). Automotive debt remains stable at £9.9 billion (1.9 trillion yen).

Ongoing Transformation Efforts

After reassessing its production assets, Nissan recorded asset impairments exceeding £2.61 billion (500 billion yen) across North America, Latin America, Europe, and Japan. In addition, the company expects restructuring expenses to surpass £313 million (60 billion yen) as part of its ongoing transformation efforts.

Nissan Chief Executive Ivan Espinosa said, 'We are taking the prudent step to revise our full-year outlook, reflecting a thorough review of our performance and the carrying value of production assets.'

He added, 'We now anticipate a significant net loss for the year, due primarily to a major asset impairment and restructuring costs as we continue to stabilise the company. Despite these challenges, we have significant financial resources, a strong product pipeline and the determination to turnaround Nissan in the coming period.'

An Era of Financial Fluctuations

Between fiscal years 2019 and 2023, Nissan experienced significant financial fluctuations. In FY2019, the company reported a net loss of £3.5 billion (671.2 billion yen), primarily due to restructuring costs and asset impairments totalling £3.15 billion (603.0 billion yen).

The following year, FY2020, saw a reduced net loss of £2.34 billion (448.7 billion yen), with net revenue declining to £41 billion (7.86 trillion yen) amid the COVID-19 pandemic.

A turnaround began in FY2021, as Nissan returned to profitability with a net income of £1.12 billion (215.5 billion yen) and net sales increasing by 7.1% to £112 billion (8.42 trillion yen). This positive trend continued into FY2022, where net income rose to £1.15 billion (221.9 billion yen), and net revenue reached 10.6 trillion yen.

In FY2023, Nissan's financial performance improved, achieving a net income of £2.22 billion (426.6 billion yen) and revenue of £66.2 billion (12.686 trillion yen), marking a 20% year-over-year increase.

What Lies Ahead for Nissan

Aside from the failure of the proposed Nissan-Honda merger, the Japanese automaker also announced plans to close three factories, starting with one in Thailand, and reduce shifts at U.S. plants in Tennessee and Mississippi.

Looking ahead, the company plans to expedite vehicle development and improve competitiveness by launching new models, including its first plug-in hybrid and a third-generation Leaf EV. Nissan maintains a strong financial position despite the challenges, with nearly £7.8 billion (1.5 trillion yen) in net cash and £17.7 billion (3.4 trillion yen) in liquidity. The company is also reevaluating its alliance with Renault and Mitsubishi, which may soon dissolve.