Crisis-hit Japanese automaker Nissan announced that it would cut 12,500 jobs globally as the company struggles with weak sales and the arrest of its former chief Carlos Ghosn.
The embattled firm has been buffeted by poor performance in the United States and Europe as well as the scandal of financial misconduct charges against former boss Ghosn.
Nissan is considering laying off 10 per cent of the total workforce over the next three years. As part of the larger global right-sizing, the company will be handing pink slips to over 1,700 workers in India, according to reports.
The lay offs are expected to take place this year. However, the car maker has not specified the job roles which will be most affected.
While announcing the quarterly results, the company said as part of its initiative to improve efficiency, it will be laying off workers around the world. Apart from India, Nissan will be asking over 1,420 employees from the US, about 1,000 employees from Mexico, 830 in Indonesia and another 880 employees from two facilities in Japan.
"Nissan will reduce its global production capacity by 10 per cent by the end of fiscal year 2022. In line with production optimisations, the company will reduce headcount by roughly 12,500," the company said in a statement.
The company chief executive Hiroto Saikawa said 6,400 job cuts had already been carried out in the 2018 and 2019 fiscal years at eight locations.
He declined to identify the six locations at which the firm plans to make another 6,100 cuts between fiscal 2020-2022, saying some factories would close while others would operate with fewer production lines.
"We acknowledge the first-quarter results were very tough," Saikawa said.
"We knew the pace of sales would be tough, but I think we have to admit that it was slightly below our expectations," he added.
"But I believe we can fully recover to our expectation levels in the second and third quarter." Nissan said net profit slumped nearly 95 per cent in the April-June quarter due to falling sales and growing costs.
The automaker's bottom line profit dropped to 6.4 billion yen (USD 59 million) for the three months to June, from 115.8 billion yen last year, on sales down 12.7 percent at 2.37 trillion yen.
"Profitability was negatively impacted by the decrease in revenues and external factors such as raw material costs, exchange rate fluctuations and investments to meet regulatory standards," Nissan said.
Operating profit fell 98.5 per cent, to just 1.6 billion yen, but the firm left its full-year earnings forecast in place, predicting net profit of 170 billion yen on sales of 11.3 trillion yen for the fiscal year to March 2020.
Nissan's decision comes amid auto makers in India cutting production after sales have been dull for a year now. Jobs have been on the line too, as auto component makers and dealers are also facing the heat of declining sales.
The passenger vehicle sales in India dipped by 17 per cent in April—the lowest in the last eight years, as per data by Society of Indian Automobile Manufacturers (SIAM).
