Cut sales and aim for volume: New Business Model of Nissan

Cut sales and aim for volume: New Business Model of Nissan

The Automotive industry is one of the largest industrial sectors. It comprises of a variety of companies that design, develop, and manufacture vehicles all over the world.  One of the most popular car builders is Nissan.  The company currently sells the Infiniti, Nissan, and Datsun brands.

However, the company has recently stated that it plans to change its business model. Nissan intends to close two manufacturing sites and eliminate at least 4,300 white-collar jobs around the globe. The automaker said it would cut 12,500 jobs from 14 sites around the world. The company plans to reduce the number of employees at Nissan’s North American head office in Tennessee. They also plan to do the same at their European headquarters in Geneva. According to the sources, the carmaker will focus on head offices in the United States and Europe. People who are working at the headquarters will have to adapt to the new reality as Nissan plans to reduce aggressive advertising and marketing. 

All of these activities were done for the sake of reorganizing the company. Good marketing is a luxury; thus, Nissan spends up to 1 trillion yen a year. This equals 44% of Nissan’s annual fixed costs of 2.2 trillion yen.

Additionally, one of the main factors that made the company reconsider its marketing tactics is the fall in Nissan sales around the globe. Thus, in 2020, people aware of the situation expect that global sales will fall to five or slightly above five million vehicles. To remind you, Nissan’s goal is to sell 5.6 million cars during the current financial year.

Possible Future Risks

The company has a plan B, and in case of a drastic loss, it may launch a restructuring plan in the current financial year. Otherwise, Nissan may decide to wait until the spring of 2021 when the next financial year will end. Nissan is also part of an alliance with Mitsubishi and Renault. However, there is a risk that the company could post another loss in the last quarter of 2019 that ends in March.

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