In sharp contrast to its rival automakers, financially troubled Nissan Motor Co. announced Wednesday that it expects to post net losses of 14 billion yen for the 1997 business year.
The company also plans to sell off some of its real estate holdings — possibly including its headquarters in Tokyo’s Ginza — as part of a drastic restructuring plan.
Nissan’s announcement came as Toyota Motor Corp. and Honda Motor Co. reported record profits for the 1997 business year. The move illustrates the company’s critical situation and its struggle to form a strategy that will take it through the 21st century.
Prior to Wednesday’s announcement, Nissan had revised its earlier net profit forecast of 16 billion yen downward due to huge losses in the United States triggered by the declining resale value of leased vehicles and sluggish sales.
The value of leased vehicles at the end of their contracts is forecasted to be lower than originally thought, due to the deterioration of the U.S. used-car market, it said.
Announcing the company’s restructuring program, Nissan President Yoshikazu Hanawa said Nissan must implement drastic reforms to strengthen its financial condition as well as the competitiveness of its products.
“Competition in the auto industry will further intensify globally … and these measures are the ones that will realize highly effective management of our company so we can survive through the 21st century,” Hanawa said.
Hanawa said Nissan, the nation’s No. 2 automaker, will try to reduce its 2.5 trillion yen in consolidated interest-bearing liabilities by 1 trillion yen by the 2000 business year. It also intends to achieve a consolidated operating profit-to-sales ratio of 5 percent by the same year.
To increase its financial strength, the firm plans to sell real estate — which may include Nissan’s headquarters in the upmarket Ginza district — and shares.
Shifting away from its expansion policy, Nissan will also restructure its current four-channel sales system to a two-channel sales system.
The company also hopes to reduce its platforms from 25 to 14 in the 2000 business year and to 10 in 2002; it will also decrease the number of models it produces. “Our dealers tend to say that if Toyota introduces a new model to the market, we should have a similar model,” Hanawa said. “But from now on, we have to say that we can compete with a different model that is unique to Nissan.”
The automaker also said it has decided to place more emphasis on rebuilding its U.S. business operations while freezing other overseas projects for a while. In line with that policy, the firm will consolidate its regional headquarters for Nissan North America, Inc. in Torrance, Calif. and its U.S. sales company, Nissan Motor Corp. U.S.A., in Gardena, Calif.
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