By Sean McLain
YOKOHAMA, Japan -- Nissan Motor Co. faces the prospect of steeper cost cuts after its ambitious turnaround plan ran into the stark reality of a slowing auto industry.
"We need to reduce fixed costs. We need to thoroughly cut spending," Chief Executive Officer Makoto Uchida said Thursday after Nissan posted a net loss of 26.09 billion yen ($237 million) for the October-December quarter, its first quarterly loss since 2009, during the global financial crisis.
The company also slashed its outlook for the financial year ending in March, the second time it has done so. Nissan now expects operating profit of Yen85 billion as a result of worse-than-expected sales. The company said the poor results meant it wouldn't pay a dividend to shareholders for the second half of the year.
In the wake of former Chairman Carlos Ghosn's arrest in 2018 for alleged financial misconduct, Mr. Uchida's predecessor, Hiroto Saikawa, said Nissan's business was rotten.
The problem, Mr. Saikawa said, was the U.S., where sales had grown rapidly on the back of generous discounts that were destroying profits. The solution was to charge more for Nissan cars and what the company lost in volume it would gain in profit, he said.
Sales fell precipitously and profits failed to rebound. Today, Nissan is bleeding cash.
"We need to do more than what we have done, or it will be hard to improve our profitability," Mr. Uchida said.
Mr. Saikawa, the former CEO, had promised that this year would be when Nissan's sales would hit bottom. Mr. Uchida said Thursday that was still at least a year away.
The problem, Nissan says, is that not enough people want to buy its cars, particularly in the U.S. The competition has been faster to roll out new products, making Nissan's look old by comparison, said Ashwani Gupta, Nissan's chief operating officer.
"We know what, exactly, the problem is," Mr. Gupta said. Nissan's plan to charge more for its cars is hamstrung by the fact that car sales are slowing, he said. Nissan's latest vehicles are nearly twice as old its competitors, which the company plans to remedy by rolling out eight new models over the next two years, Mr. Gupta said.
Nissan announced in July that it would cut production and lay off 12,500 people, part of a plan to slash costs by around $2.8 billion. In September, as sales and profits continued to fall, the board asked for Mr. Saikawa's resignation.
On Thursday, Nissan hinted at things to come. It said it would stop making its low cost Datsun brand in Indonesia. The company said it would halt production of models that aren't selling and take a harder look at its plants around the world. Part of the plan will involve leaning more on factories owned by its alliance partners, Renault SA in Europe and Mitsubishi Motors Corp. in Southeast Asia.
Last month, the heads of the alliance companies said they would stop duplicating efforts on research and engineering, and build more products at each other's plants.
"In some cases, we may have to give up on some areas," Mr. Uchida said.
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