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Nissan to Close Indonesian Manufacturing Facilities After Losses

Japanese car maker, Nissan Motor Co., Ltd. close manufacturing facitilites in Indonesia and Spain after book a losses in 2019, said the company today (05/28) - Photo by the Company

JAKARTA (TheInsiderStories) – Japanese car maker, Nissan Motor Co., Ltd. close manufacturing facitilites in Indonesia and Spain after book a losses in 2019 and as part of its four-years plan, said the company today (05/28). Thailand plant become as single production base in Southeast Asia for the company.

In addition, exiting South Korea, the Datsun business in Russia and streamlining operations in some markets in Southeast Asia. It said, the global COVID-19 pandemic substantially impacted Nissan’ production, sales and other business activities in all regions.

The impact is reflected in the manufacturer’ financial results in 2019. Last year, the consolidated net revenue declined to JPY9.89 trillion (US$91.75 billion), resulting in an operating loss of JPY40.5 billion and a net loss of JPY671.2 billion. This includes costs associated with restructuring and impairments by JPY603.0 billion as Nissan focused on operational and efficiency improvements to transform the business.

For other regions, Nissan will consolidating North American production around core models and focusing Nissan’ core operations in the markets of Japan, China and North America. In the next 18 months, the company plans to introduce 12 models.

By implementing the plan, Nissan aims to achieve a 5 percent operating profit margin and a sustainable global market share of 6 percent by 2023, including proportionate contributions from its 50 percent equity joint venture in China.

The CEO, Makoto Uchida, said “Our transformation plan aims to ensure steady growth instead of excessive sales expansion. We will now concentrate on our core competencies and enhancing the quality of our business, while maintaining financial discipline and focusing on net revenue per unit to achieve profitability. This coincides with the restoration of a culture defined by “Nissan-ness” for a new era.”

He continued, the four-year plan is focused on two strategic areas, building on Nissan’ reputation for innovation, craftsmanship, customer-focus and quality, alongside an ongoing cultural transformation. Then, right-sizing Nissan’ production capacity by 20 percent to 5.4 million units a year under the assumption of a standard shift operation

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. 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.

In 2014, Nissan opened a second factory in Purwakarta, West Java, for an investment of JPY33 billion 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.

The producer 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.

US$1: JPY107.73

Written by Staff Editor, Email: theinsiderstories@gmail.com