Japanese car maker, Nissan Motor Co., says it will cut 12,500 jobs, warning that a quick turnaround in its performance will be not imminent, after reporting its quarterly profit was nearly wiped out.
Nissan said on Thursday in Yokohama that the job cut, to be made globally by 2022, would also reduce global production capacity and product line-up by about 10 per cent, by the end of fiscal 2022.
The automaker said in a statement that it had 138,000 employees globally as at March 2018.
The announcement shows how a crisis – brought about by sluggish sales and rising costs – is worsening at Japan’s No. 2 automaker even as it tries to recover from a financial misconduct scandal surrounding ousted Chairman Carlos Ghosn.
Its first quarter operating profit plunged 98.5 per cent to 1.6 billion yen ($14.80 million) as it continues to struggle in North America, a key market where it has been stung by mounting costs of vehicle discounts to keep up with rivals.
Years of heavy discounting to grow sales has left Nissan with a cheapened brand image and low vehicle resale values, while the costs to offer high discounts have hit its bottom line.
Nissan had flagged a steep drop in profit on Wednesday.
The dismal quarter will add pressure on Hiroto Saikawa, Nissan’s embattled Chief Executive Officer (CEO), who has been tasked with shoring up the company’s performance amid the Ghosn scandal.
Ghosn has denied the charges of financial misconduct.
The automaker is widening job cuts initially announced in May as it struggles to improve weak profit margins in the U.S. where Ghosn had for years pushed to aggressively grow market share during his time as CEO.
The company maintained its profit forecast of 230 billion yen for the year ending March 2020, a 28 per cent drop from last year and its weakest in more than a decade.