Car manufacturing giant Nissan could be on the brink of collapse with only 12 months to survive, it has been warned.
The Japanese auto firm which employs 7,000 people in the UK and 17,000 in the US has embarked on a huge cost-cutting programme after suffering heavy losses.
Nissan said last month it would axe 9,000 jobs and 20 per cent of its global manufacturing capacity, as it scrambles to reduce costs by $2.6billion (£2billion) in the current fiscal year amid a sales slump in China and the US, its two biggest markets.
Chief executive Makoto Uchida is taking a 50 per cent pay cut and it has now been reported that chief financial officer Stephen Ma is stepping down.
But insiders fear the moves could not be enough as Nissan struggles to stay competitive with rivals who have pushed ahead more successfully with popular hybrid cars.
The warnings come as a strategic deal signed with competitors Mitsubishi and Renault back in 1999, covering European, Japanese and US markets, could be ending.
Two anonymous ‘senior officials’ at Nissan have been quoted by the Financial Times as saying that Renault is now looking at reducing its financial stake in Nissan.
That could leave Nissan requiring cash backing from the Japanese or US governments over the next year to remain in business, according to the report.
The company risks running up its largest ever debt by 2026, potentially owing as much as $5.6billion (£4.4billion), it is suggested.
The firm’s worldwide sales slumped by 3.8 per cent to 1.59million vehicles in the first half of the current financial year, largely driven by a 14.3 per cent fall in China.
Nissan has around 7,000 employees in the UK, including 6,000 at the country’s largest car-making plant in Sunderland.
The FT quoted a ‘senior official’ at Nissan as saying: ‘We have 12 or 14 months to survive. This is going to be tough. And in the end, we need Japan and the US to be generating cash.’
Nissan’s head of manufacturing Hideyuki Sakamoto previously told a news conference early last month: ‘Globally, we currently have 25 vehicle production lines. Our current plan is to reduce the operational maximum capacity of these 25 lines by 20 per cent.
‘One specific method for this is to change the line speed and shift patterns, thereby increasing the efficiency of operational personnel.’
And CEO Mr Uchida told reporters: ‘This has been a lesson learned and we have not been able to keep up with the times.
‘We weren’t able to foresee that hybrid electric vehicles and plug-in hybrids would be so popular.’
There have been suggestions that Nissan could strengthen ties with Japan’s second largest carmarker Honda which could buy a stake in the smaller firm – though sources were quoted describing this as a ‘last resort’.
Toyota is the largest automaker in both Japan and the world, responsible for about 10million vehicles each year – compared to Nissan’s 3.4million.
Meanwhile, Nissan also last month called for urgent action to avoid carmakers being penalised for the slowdown in electric vehicle sales in the UK which the firm blamed on outdated targets in the country’s Zero Emissions Vehicles Mandate.
The Zero Emissions Mandate forces firms to increase the proportion of EVs they sell each year until a total ban on new petrol and diesel motors in 2030.
This year, EVs must make up 22 per cent of a firm’s car sales and 10 per cent of van sales, with the threshold rising annually and makers facing a £15,000 fine for every sale beyond it.
Labour’s 2030 target is five years earlier than that set by former Tory prime minister Rishi Sunak.
And Nissan said that missing the target would lead to significant fines for manufacturers unless credits are purchased from EV-only brands – none of which manufacture in the UK.
The firm called for more flexibility on borrowing credits from future years and a two-year monitoring period for 2024 and 2025 instead of possible fines for carmakers.
Missing targets will result in significant fines for manufacturers unless credits are purchased from EV-only brands – none of which manufacture in the UK.
Guillaume Cartier, chairman of the Nissan Africa, Middle East, India, Europe and Oceania region, said: ‘It risks undermining the business case for manufacturing cars in the UK, and the viability of thousands of jobs and billions of pounds in investment.
‘We now need to see urgent action from the Government by the end of the year to avoid a potentially irreversible impact.’
Manufacturers say they support Net Zero but a lack of demand for EVs has left firms struggling to make the investment, with many motorists said to have been put off by high prices and a lack of charging points.
Lisa Brankin, the chairman and managing director of Ford UK, last week called for the Government to urgently introduce ‘incentives’ such as tax breaks to convince drivers to switch away from petrol and diesel.
She said: ‘As an industry we have repeatedly said that we support the Government’s trajectory and we support the ambition that the Government has set out, it’s just that there isn’t customer demand.’
The Society of Motor Manufacturers and Traders has voiced fears that the pace of the transition could hit carmakers as demand for zero-emission vehicles ‘failed to meet ambition’.
The organisation forecasts a slowdown in consumer demand meant EV sales would only reach 18.5 per cent of the total market, against the 2024 ZEV Mandate target of 22 per cent.
Chancellor Rachel Reeves has said the Government would ensure ‘proper support’ for the car industry as it phases out sales of new petrol and diesel vehicles.
She told broadcasters last week: ‘We are committed to the 2030 target for phasing out the purchase of new petrol and diesel cars, but it is really important within that to make sure that we get the balance right and have proper support for the automotive sector, for the car industry in Britain.
‘We have just launched a consultation to look at the plans that we inherited from the previous government which would have meant fines for businesses that didn’t sell a proportion of electric vehicles, because we want to keep investment, we want to keep jobs in Britain.’
