Japanese automakers like Nissan face Chinese competition with layoffs
Report noted For Bloomberg Fears of a default by Japanese company Nissan, with news of its intention to lay off thousands of employees, have increased concerns about its creditworthiness. The cost of insuring Nissan bonds against a default jumped to 180 basis points on Friday morning, according to a trader in credit default swaps contracts.
Nissan has previously announced that it will lay off 9,000 employees as it reduces its global production to address low Sales in China and the United States while the company’s shares fell more than 6% Friday morning in Tokyo after its overall imports fell 94% in the first half of this year.
The Japanese auto giant says it will cut 9,000 jobs worldwide in a cost-saving effort that will reduce its global production by a fifth. The company employs more than 6,000 people at its plant in Sunderland, northeast England. It also slashed its 2024 operating profit forecast by 70%. It was the second time this year the company has cut its outlook. “These transformational measures do not mean the company is shrinking,” Nissan CEO Makoto Uchida said. “Nissan will restructure its business to become more nimble and flexible.”
The company said Uchida’s monthly salary would be cut in half and that other top executives would also take pay cuts.
Chinese competition
Increased competition in China has driven down prices, leaving many foreign automakers there struggling to compete with strong domestic Chinese companies like BYD.
The company is also struggling in the United States, where inflation and high interest rates have hit new vehicle sales.
The drop in demand has prompted carmakers to cut prices, hitting their profits. In November last year, Nissan and its partners announced a £2 billion ($2.6 billion) plan to build three electric car models at its factory in Sunder land The company said it will build electric versions of the Qashqai and Juke at the plant, along with the next-generation Leaf electric car, which is already being produced there.
