Nissan's Shares Surge as Restructuring Pain Signals Turnaround Potential
38min read The automotive industry has long been a battleground of shifting fortunes, and Nissan Motor Co. is now positioning itself for a comeback. After reporting a ¥440 billion ($3.1 billion) net loss for the fiscal year ending March 2023—a result of restructuring charges—the company’s shares have climbed nearly 20% over the past three months. This surge reflects investor optimism that the painful cuts and strategic shifts are finally bearing fruit, turning the page on years of stagnation and mismanagement.
At the heart of Nissan’s turnaround is a sweeping restructuring plan launched in 2020. The automaker slashed global vehicle production capacity by 20%, reduced fixed costs by ¥200 billion annually, and trimmed its product lineup to focus on high-demand segments like electric vehicles (EVs) and crossovers. Over 12,500 jobs were eliminated globally, including roles at its Japanese headquarters, and 14 factories worldwide were closed or repurposed. While these moves contributed to the reported loss, they also freed up capital for critical investments.
The stock’s rebound since late 2022 underscores investor confidence in this strategy. Even as global automotive demand dipped in 2022 due to supply chain bottlenecks, Nissan’s net profit margin improved from -1.2% in fiscal 2021 to 2.1% in fiscal 2023, excluding restructuring charges. This suggests the cost cuts are already delivering tangible efficiency gains.
Central to Nissan’s future is its pivot to electric vehicles. The Ariya, its flagship EV, has become a key growth driver, with sales surging 30% in 2023 compared to 2022. The company aims to electrify 55% of its global sales by 2030, backed by a ¥2 trillion investment in EVs and autonomous driving technologies. This aligns with broader industry trends: EVs are projected to account for 33% of global vehicle sales by 2030, up from 10% in 2022, according to BloombergNEF.
However, Nissan’s path to recovery is not without hurdles. Its alliance with Renault and Mitsubishi, once a source of strength, has grown contentious, with governance disputes and diverging strategic priorities. Meanwhile, competition in EVs is intensifying, with rivals like Tesla, Ford, and Chinese manufacturers like BYD ramping up production. Nissan’s reliance on the Chinese market—its largest—also exposes it to geopolitical risks, including trade tensions and supply chain disruptions.
Yet the company’s focus on profitability over volume appears to be paying off. In North America, where it has reduced inventory and prioritized SUVs, operating margins rose to 6% in fiscal 2023, up from 2% three years earlier. Similarly, in Japan, the brand’s home market, the shift to premium vehicles like the Z Proto has improved brand perception.
Analysts at Goldman Sachs estimate that Nissan’s restructuring could add ¥200 billion to annual earnings by 2025, assuming stable demand and no major macroeconomic shocks. Meanwhile, its EV lineup, including the Leaf—still one of the world’s best-selling EVs—and the Ariya, positions it well to capture a growing market.
In conclusion, Nissan’s recent stock surge reflects a cautious but hopeful bet on its turnaround. The restructuring pain has been real, but the focus on cost discipline, EV innovation, and core markets is beginning to translate into measurable gains. While risks remain, the company’s strategic clarity and the tailwinds of global electrification suggest that the worst may be behind it. For investors, the question now is whether Nissan can sustain this momentum—and whether its renewed vision will finally deliver long-term value.
With its EV sales outpacing the industry’s 25% compound annual growth rate over the past three years, Nissan is proving that its comeback is more than just a slogan.
