Major car firm ‘discontinuing cheapest model & halting pay rises’ – weeks after axing 20,000 jobs and £4bn losses
A MAJOR car firm is reportedly discontinuing its cheapest model and halting pay rises just weeks after announcing £4billion in losses.
The struggling car maker had announced plans to axe over 20,000 members of staff due to soaring production costs and disappointing sales.
Cash-strapped Nissan, Japan’s third-largest carmaker, is already facing billions in losses – its worst annual loss in a quarter century.
Nissan is looking to raise £5.2billion to stay afloat, with UK Export Finance underwriting a £1billion loan – which will support the beleaguered company.
Now, the company has started offering buyouts to US workers and has suspended merit-based wage increases worldwide, reports Reuters.
As part of the cuts, Nissan has offered separation packages to workers at its Canton plant in Mississippi.
Salaried workers in human resources, planning, information technology and finance have also been offered similar packages.
Merit-based pay increases have also been suspended worldwide by Nissan for the current business year, in a separate email seen by Reuters.
Christian Meunier, Nissan America’s chairman, said the buyouts are “crucial for Nissan’s comeback” in the US, its most important market.
“While substantial efforts have been made in the US to help right-size Nissan, we need to take additional, limited, strategic action here at a local level,” Meunier said in an email.
And Nissan has also discontinued its cheapest model, the manual-equipped Versa, according to reports.
The Japanese automaker halted making the Versa with the five-speed manual at its Aguascalientes, Mexico, factory, according to Automotive News.
The publication stated that a “person with knowledge of the matter” revealed that the most affordable new car on the market would see “production cease”.
It is understood that the rest of the Versa lineup will continue as usual but this is yet another huge blow to the carmaker.
It comes after reports the manufacturer is planning to cut its number of factories from 17 down to 10.
This has prompted fears that the brand’s Sunderland factory could be under threat.
While Nissan has not confirmed the fate of its only UK factory, its CEO Ivan Espinosa has insisted that more electric cars will be produced there.
It is hoped that the £1billion loan from Nissan’s lenders, underwritten by The Government, will protect the site.
The huge cash injection is just a fifth of the 1Trillion Yen needed by the company to survive.
It will also look to issue as much as 630billion yen in convertible securities and bonds, including high-yield and euro notes.
Reportedly, the firm is looking to sell-and-lease-back its Yokohama headquarters alongside several properties in the United States.
Finally, the struggling car manufacturer is eyeing a sale of its stakes in Renault and battery maker AESC Group.
The aggressive fundraising plans underscore Nissan’s rapidly deteriorating financial and operational position, despite efforts by newly appointed chief executive Ivan Espinosa to turn the company around.
Development on other Nissan models has been paused, whilst the company tries to balance its books.
Work on all “advanced and post-FY26 product activities” has been paused, though Nissan has not confirmed which particular vehicles will face suspension.