After closed one factory in February, 2019, now Japanese car producer, Nissan Motor Co., will end its production in Indonesia - Photo by the Company

JAKARTA (TheInsiderStories) – After closed one factory in February, 2019, now Japanese car producer, Nissan Motor Co., will end its production in Indonesia. Since July, 2019, the manufacturer have announced global downsizing by reducing 12,500 workers over the next three years.

The plan includes cutting 6,400 jobs by March 2020 in eight production bases, Indonesia as a first step. The CEO, Makoto Uchida, has warned that deeper cuts probably are necessary to turn around the automaker, which has been in turmoil since the 2018 arrest of Carlos Ghosn, its former chairman.

“Nissan has made the decision to end car manufacturing at the Nissan plant in Indonesia as part of an optimization plan that includes rightsizing, production optimization and reorganizing of business operations. The strategic reforms are designed to build an operational base that will ensure consistent and sustainable profitability over the medium term,” said Isao Sekiguchi, president of PT Nissan Motor Indonesia, in a written statement received by TheInsiderStories on Friday (03/20).
He continued, “We will continue to work with our Alliance partners on ensuring manufacturing footprint in Indonesia and further enhance the Nissan brand by bringing in new models. We wish to reiterate our ongoing commitment to delivering sales and excellent services to our valued customers in Indonesia.”

In 2014, Nissan opened a second factory in Purwakarta, West Java, for an investment of JPY33 billion (US$308.01 million) to produce Datsun GO, with production capacity to 260,000 units a year. Nissan is known to have announced global downsizing in July by reducing 12,500 workers over the next three years. The plan includes cutting 6400 jobs by March 2020 in eight production bases including Indonesia as a first step.

On Feb. 12, Nissan has filed a civil lawsuit against Ghosn to seeks an initial amount of JPY10 billion, in order to recover a significant part of the monetary damages inflicted on the company, as a result of years of his misconduct and fraudulent activity.

The financial damages claimed by Nissan are linked to the former chairman’ breach of fiduciary duty as a company director and his misappropriation of Nissan’ resources and assets. This claim for damages announced today has been calculated on the basis of costs incurred by Nissan due to Ghosn and his corrupt practices over many years.

The new claims are in addition to an ongoing civil lawsuit Nissan initiated against Ghosn in the British Virgin Islands on August 30, 2019, where unauthorized payments and transactions were processed through special purpose entities, seeking the title of a luxury yacht and/or damages and other relief.

Nissan has intensified its campaign to recover damages from its former chairman following his illegal flight from justice. The legal actions form part of Nissan’ policy of holding Ghosn accountable for the harm and financial losses incurred by the company as a result of his misconduct.

Nissan also reserves the right to pursue separate legal action over groundless and defamatory remarks made by Ghosn in comments to the media following his escape to Lebanon in violation of his bail conditions in Japan.

As known, Indonesian car sales dropped 10.8 percent during 2019 amid the weak demands and other factors. The car manufacturer association reported, last year the producer only sold 1.03 million units from a year ago 1.15 million cars.

In December only, the manufacturer sold 86,582 cars, lowered compared to November 90,798 units and from a year ago 87,846 vehicles. The market leader was still controlled by Toyota, which was able to record sales of 333,222 units, followed by Daihatsu 177,284 units, and Mitsubishi at the third position by posting 161,765 units of sales.

Earlier, Gaikindo has predictef the car sales will not be achieved cause low demand, tight competition, and influx of new players and variants from abroad, such as Wuling, Mitsubishi Xpander, and Nissan.

According to the analysts, car sales still have an opportunity to rise double digits if the economy grow by around 7 percent. They expect that throughout 2020, discount wars will decrease significantly because the producers are beginning to maintain their profit margins.

Currently, PT Astra International Tbk (IDX: ASII), as the largest car manufacturer in Indonesia no longer aggressively, but takes the strategy by releasing the latest Avanza and Xenia models. The strategy proved to be quite successful because the company’ market share maintained in 52 percent level.

To support the domestic car sales, Gaikindo appreciated the government’ initiative to simplify the rules for importing electric cars which are considered to be able to open investment opportunities entering Indonesia.

US$1: JPY107.14

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