ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintSite TitleTitle ChevronIcon Twitter
Nissan-Renault alliance

Nissan to ax over 2,500 jobs in India and Indonesia by March

Automaker has struggled to penetrate both huge Asian markets

Workers assemble the frame of a Datsun car in Indonesia. Sales of Nissan's emerging-market brand have fallen.   © Reuters

MUMBAI -- Japanese automaker Nissan Motor will slash more than 2,500 jobs in India and Indonesia by March 2020 as part of a downshift in global production to cope with slumping car sales, according to details of the company's plans obtained by Nikkei.

The company will eliminate 1,700 jobs in India -- the biggest losses of any country affected by the first round of 6,400 cuts -- and 830 in Indonesia. Nissan and its emerging-market brand Datsun have struggled to gain traction in both Asian countries, even as other Japanese automakers fared well.

The restructuring is part of a plan announced Thursday by Nissan to cut 12,500 jobs by the end of March 2023.

The largest job losses after India will be in the U.S., where Nissan plans to shed 1,420 workers.

In Mexico, another target of the worldwide cutbacks, 1,000 jobs will be eliminated. The country has served as a production hub for the Americas, but falling sales have seen Nissan lose the top share of the Mexican market to General Motors.

The automaker will also eliminate 880 jobs in Japan, 470 in Spain and 90 in the U.K. in the 2018 and 2019 fiscal years. Another 6,100 jobs will be cut in fiscal 2020 to fiscal 2022. 

Sources say Nissan India offered voluntary retirement packages to some employees in September 2018 as part of the restructuring plan. Nissan says it employs 40,000 people in India directly and indirectly.

Nissan, which operates in India with global alliance partner Renault, has a manufacturing plant in Chennai that employs more than 2,000 engineers to support product innovation and customization, according to the company's website. It was unclear how many of these engineers would lose their jobs.

The plant, in which the alliance planned to invest around 45 billion rupees ($653 million) until 2022, has the capacity to produce up to 480,000 vehicles a year.

Nissan has endured a rather dull ride in India in recent years. Sales for the year ended in March fell 30.8% to 36,525 vehicles. For the quarter ended in June, Nissan India recorded a market share of just 0.75%.

In Indonesia, Nissan sold 7,176 vehicles during the first half of 2019, rising 49% on the year but lagging far behind market leader Toyota Motor's 154,360 units. Faring worse was Datsun, which was revived as a brand in 2014 under former Chairman Carlos Ghosn after a 30-year absence. It sold 3,844 cars during the six months ended in June, a 49.5% drop.

Japanese automakers hold a combined market share of more than 80% in Indonesia. But this success has not benefited Nissan. The company now languishes behind a relative newcomer in China's Wuling, which sold 7,767 vehicles in the first half of this year.

Nissan has halted production of cars under its own brand in Indonesia, data from the Association of Indonesia Automotive Industries shows. It produced 180 Nissan vehicles in January before halting assembly lines.

According to Indonesia's Ministry of Industry, the company now focuses on producing Datsun cars as well as engines for its alliance partner Mitsubishi Motors' Xpander, one of the most popular vehicles in the country.

"We have already begun stopping production lines and making job cuts at eight of our operation points," CEO Hiroto Saikawa told an earnings conference on Thursday at which Nissan announced a 99% drop in first-quarter operating profit. "We are looking at six additional locations."

Nissan's production cuts represent a reversal of the expansion led by Ghosn.

The automaker will reduce capacity by 600,000 vehicles at the 14 plants, mostly in emerging countries, through fiscal 2022. The reductions will bring Nissan's global capacity to 6.6 million vehicles a year, closer to the roughly 5.5 million units sold last fiscal year.

Under Ghosn, who led Nissan as part of one of the world's biggest automaker alliances, the company built up production in the Americas, Southeast Asia and other markets. In 2017, Nissan and alliance partners Renault of France and Mitsubishi Motors announced a global sales target of 14 million vehicles for 2022, a gain of about 40% over the previous year.

The company on Thursday lowered its sales outlook for the year ending March 2023 to 14.5 trillion yen ($133 billion), 2 trillion yen less than in the initial plan.

Nikkei staff writers Shotaro Tani in Jakarta and Shuichi Maruyama in New York contributed to this story.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends July 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to the Nikkei Asian Review has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media