Nissan's Structural Crisis: A Perfect Storm of Overextension and Mismanagement

Nissan Motor Company, once a symbol of automotive innovation, now stands at a crossroads. Job cuts, plant closures, and missed profit targets reveal a company grappling with systemic operational inefficiencies, poor strategic decisions, and governance failures that threaten its very viability. As restructuring efforts falter and EV competition intensifies, investors face a stark warning: Nissan’s decline is structural—and irreversible without radical change. Here’s why the risks demand immediate action.

Operational Overextension: The Cost of Bloat

Nissan’s restructuring efforts have been anything but decisive. By early 2025, it had announced global job cuts totaling 20,000 workers—15% of its workforce—and plans to slash production capacity by 20%, reducing annual output from 5 million to 4 million units. Yet these measures are reactive, not proactive. Plants in Thailand, Mexico, and the U.S. have already shut down, while inventory levels soared to 660,000 vehicles by late 2024—more than double the 2022 figure—highlighting catastrophic overproduction.

The financial toll is staggering. A ¥14.1 billion net loss in Q4 2024 marked Nissan’s second consecutive quarterly loss, with full-year forecasts predicting a ¥80 billion net loss—a 79% drop in operating profit. Global sales fell across key markets: a 16% decline in China, 9% in Europe, and a 2.2% drop overall. Even North America, once a growth engine, now faces contraction.

Strategic Blunders: The Failed Honda Merger and EV Underperformance

Nissan’s leadership has compounded operational failures with strategic missteps. The collapsed merger with Honda—a potential lifeline—exposed internal divisions and a refusal to confront hard truths. Honda’s proposal to absorb Nissan as a subsidiary was rejected, with executives clinging to political sensitivities around plant closures in Kyushu, Tennessee, and the U.K. Instead of consolidation, Nissan turned to Foxconn—a partnership that lacks the scale to counter Tesla or BYD’s dominance in EVs.

The EV market, meanwhile, has become a graveyard for Nissan’s ambitions. The scrapped Kyushu EV plant—a $1.1 billion project—symbolizes misallocated capital, while its Leaf model struggles against cheaper Chinese rivals. Nissan’s failure to anticipate U.S. demand for hybrids (dominated by Toyota) and EVs (led by Tesla and BYD) has left it stuck in the middle: neither cost-efficient nor technologically advanced.

Leadership and Governance: A Legacy of Mismanagement

Carlos Ghosn’s critiques of Nissan’s governance, dating back to the 2010s, now read like a prophecy. He accused the board of enabling cost overruns, hiding losses, and prioritizing Renault’s interests—a pattern that persists. The recent resignation of CEO Makoto Uchida, who oversaw three failed restructurings since 2019, underscores leadership instability.

Ghosn’s warnings about systemic mismanagement align with Renault’s parallel collapse: bloated costs, delayed EV investments, and union clashes have left both companies struggling. Renault’s €2.1 billion 2025 loss and junk bond status highlight the risks of undercapitalization and poor decision-making—a fate Nissan now approaches.

The Bottom Line: Why “SELL” is the Only Option

Nissan’s problems are not cyclical but structural. Restructuring alone cannot fix overcapacity, weak sales, and a leadership vacuum. With inventory piling up, EVs losing relevance, and a board unable to align with market realities, bankruptcy risk is rising.

Investors should heed the data:
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The parallels to Renault’s decline are stark—a company that once led European markets now faces existential threats due to the same governance and strategic failures. For Nissan, the path to survival requires more than cost cuts: it demands a complete overhaul of its product strategy, global footprint, and corporate governance. Until then, the writing is on the wall.

Recommendation: SELL
Nissan’s structural decline is irreversible without radical action. With operational bloat, strategic errors, and governance failures compounding, the risks far outweigh the rewards. Investors should exit now—before the storm hits.