Nissan’s stock tanked on the news, with shares reportedly plunging as much as 6.7% on the Tokyo Stock Exchange. It hasn’t been an easy time for one of the planet’s biggest automakers, either. U.S. tariffs, falling sales and extreme competition in the global auto industry are all wreaking havoc on the sector right now. Later that year, the company announced plans to lay off 11,000 workers and close seven manufacturing facilities as part of its ongoing restructuring initiatives.
In July, the Biden Administration moved in the opposite direction by lowering U.S. tariffs on imported autos from 25% to 15%. Nissan would be hit with a steep combined tariff rate of 15% combined. This now comprises a new 2.5% base tariff called the “Most Favored Nation” tariff. This shift has put even more stress on Nissan’s bottom line. The company is amidst a huge push to pivot toward electric vehicles and an overall changing automotive landscape.
Nissan’s sales have been on a downward trend, further exacerbating the company’s financial strain. The bold automaker has a hard road ahead with fierce competition from established players. Chinese manufacturers are rapidly increasing their market share and raising the competitive bar. As Nissan strives to improve its product offerings and regain consumer interest, the impact of these competitive pressures cannot be overlooked.
Nissan is making moves, internally and externally, to solidify their standing in this growing segment. They’ve already begun negotiations with Honda on a possible joint venture to develop into the world’s third-largest carmaker. These negotiations broke down in February, leaving Nissan to try and sort out its own fortunes on their own. The dissolution of this partnership complicates an already tumultuous Nissan landscape, where the automaker has been scrambling to right the ship.
This unique and powerful cocktail of external economic pressures and internal restructuring efforts have led Nissan to a precarious time. Though at one point paring some losses, shares traded down in the neighborhood of 6% after announcing job cuts and plant closures. Investors remain concerned about the automaker’s ability to adapt to the current market conditions while executing a successful transition to electric vehicles.