The auto crisis bites again, thousands of layoffs for Nissan and Stellantis

The crisis in the car market, caught between electrification and Chinese competition, continues to bite. While the difficulties of the sector in Germany are sinking industrial production, which in September recorded a higher-than-expected decline, the sharp decline in sales forces companies to undergo drastic restructuring, with Nissan and Stellantis announcing thousands of layoffs.

Stellar announced that 1,100 employees at the Jeep plant in Toledo, Ohio will lose their jobs. The company specifies in a note that the decision was taken to “regain” competitiveness. Additionally, some operations, involving 400 employees, “will be transferred to an external service provider.” The cuts will start “from January 5, 2025”. For the group, in this way production will be adjusted to sales, which collapsed by 20% in the third quarter. “These are difficult measures to take, but they are necessary to allow the company to regain its competitive advantage and, ultimately, to restore production to previous levels,” explains Stellantis.

The crisis of the Japanese giant

The Japanese car manufacturer Nissan has instead communicated that will cut 9,000 jobs from its global workforce and reduce production capacity by 20% worldwidewithout specifying a timetable, in the face of a sharp decline in sales. At the same time, the group said it had significantly revised down its sales and operating profit forecasts for 2024. “Faced with the gravity of the situation, Nissan is taking urgent measures to reverse course and create a more responsive company and resilient,” he said in a statement. Victim of the paralysis that hit the global automotive sector, the company sank into the red between July and September, based on much weaker-than-expected quarterly results that led it to sharply revise its financial forecasts downwards.

Nissan has registered a unexpected net loss of 9.3 billion yen (56 million euros) in the second quarter (July-September) of the current financial year, versus the net profit of 49 billion yen expected by the market according to the Bloomberg consensus. Quarterly revenue fell to 2,986 billion yen (18 billion euros), down 5% year-on-year and well below expectations, while operating profit was half what analysts expected.

Like all its Japanese and Western rivals, Nissan is suffering from slowing global new car sales and a gloomy economic climate. As a result, the Yokohama manufacturer significantly lowered its forecast for the entire 2024-2025 financial year, which ends at the end of March. The group now expects annual revenue of 12,700 billion yen, up from the previous target of 14,000 billion yen, virtually unchanged from 2023-2024. It estimates operating profit of 150 billion yen, three times lower than previous forecasts. Annual forecasts for net profit are no longer contemplated: “this will be determined based on the evaluation of the costs generated by the efforts to reverse the trend”, warned the group’s executive director, Makoto Uchida, during a press conference. Nissan wants”reduce fixed costs by 300 billion yen (1.8 billion euros, ed.) compared to fiscal 2024-2025 and variable costs of 100 billion yen,” the group said.

“To achieve this goal, Nissan will reduce its global manufacturing capacity by 20 percent and its global workforce by 9,000 positions, while implementing various measures to reduce” costs and “prioritizing investment in research,” he said. The company, keen to “rationalize its assets”, will also reduce its stake in compatriot Mitsubishi Motors from 34% to 24%.

Sales declines

Nissan’s sales have suffered particularly in the United States, a crucial market where it has sold just 212,000 units in the July-September period, a decline of 2.3% year-over-year. According to Makoto Uchida, the manufacturer wants to “rebuild its brand” in that country. But the CEO remains cautious in the face of the drastic increase in US customs duties promised by Donald Trump, re-elected to the White House. “We are exporting a significant number of vehicles from Mexico to the United States, about 300,000 (units) this year,” said Makoto Uchida. “We hear about tariffs, but we are not the only ones affected (…) We will apply pressure and maintain the direction of our medium and long-term plans,” while ‘monitoring the situation very closely,’ he admitted.

Another key market in difficulty is China, where Nissan’s quarterly sales fell 13% to 172,000 units. Like its Western rivals, the group is facing stiff competition from Chinese manufacturers, which are leaders in the booming electric car market. In Europe, the Nissan’s quarterly sales fell 5.9% to 80,000 vehicles.

To catch up, the group plans to launch new electric cars in China and hybrid and plug-in electric models in the United States, reducing the development time of new models to 30 months. In August, Mitsubishi joined the “strategic partnership” formed by Honda and Nissan to collaborate on electric vehicles. The alliance with French Renault, however, was significantly reduced last year: now the two manufacturers select their joint projects on a case-by-case basis.

The German locomotive flounders

And there is always the four-wheel crisis behind the decline in German industrial production, which fell in September by 2.5% monthly and 4.6% annually, a much sharper decline than expected. In recent months, the indicator has been affected by the ups and downs of the automotive sector, which fell 7.8% in September, after a 15.4% jump in August.

Automakers are facing structural challenges that impact the entire industry, and the future looks far from rosy. Germany is entering a period of uncertainty after the breakup of its coalition government and the economic impact of the election of Donald Trump, who made customs barriers one of the pillars of his electoral manifesto, risks worsening an already negative economic situation .