Nissan Motor's announcement on Thursday regarding slashing over 12,500 jobs globally over the next few years till FY 2020 will affect India too. It will be reducing the headcount in the country by over 1,700. This development comes in the wake of sluggish sales, rising costs, the scandal surrounding ousted Chairman Carlos Ghosn as well as steeply eroding profits. Japan's No. 2 car maker, which had seen its profits plummet to a decadal low, announced a further 98.5 per cent plunge in profit to 1.6 billion yen ($14.80 million) in the first quarter of the current fiscal.
"Nissan is implementing strategic reforms in order to build an operational base that will ensure consistent and sustainable profitability over the medium term," the company said in a statement post the results announcement, adding that it will reduce its global production capacity by 10 per cent by the end of fiscal year 2022. The headcount reduction is in line with this move.
Of the 12,500 planned job cuts, over 6,400 workers have been asked to leave in the last financial year. India accounts for about 13.5% of the people fired, The Economic Times reported. Nissan will also be handing out pink slips to over 1,420 employees from the US, around 1,000 employees in Mexico, 830 in Indonesia and 880 employees from two facilities in Japan.
Nissan Motor India had come out with the Employee Voluntary Separation Scheme 2018 as part of the new mid-term plan announced in September 2018 to cut cost. Sources told the daily that the process had begun in India almost six months back, though not many employees warmed up to the scheme. A part of the planned headcount reduction in the country comes under this scheme.
Last month, the Japanese auto manufacturer announced the appointment of Sinan Ozkok as the President of its Indian operations. He replaced Thomas Kuehl who was appointed as President of India operations in 2017. According to experts, the company has been persistently hurt by churn in the top management, not to mention the fact that Nissan has not been able to crack Indian market so far.
Its attempt to crack the mass market with the Datsun brand and challenge Maruti Suzuki had backfired. Its latest attempt to leverage on its SUV heritage with the launch of Kicks in the hopes of a revival in fortunes has also failed. At the end of FY19, Nissan Motor India sold 36,525 units, registering a decline of 30 per cent in a market that grew 3 per cent. Exports have played a key role in the survival of Nissan Motor's operation in the country, and that will continue. According to sources, with one new product plan every year, Nissan will try harder to make its place in the Indian market and a plan is being put into place to revive operations.
(Edited by Sushmita Choudhury Agarwal)