Japan’s Largest Restructuring: Painful Proof of Nissan’s Resolve

On May 13, 2025, Nissan Motor Co. unveiled its bold restructuring plan, “Re:Nissan,” sending shockwaves through the global auto industry.
Unlike previous recovery efforts, this plan is truly “without sanctuary” — a drastic, no-holds-barred reform aimed at survival. The centerpiece: a global workforce reduction of 20,000 employees by fiscal 2027, marking the largest restructuring in the company’s history.
Although this figure includes 9,000 layoffs already announced, the scale underscores the severity of Nissan’s crisis.

The cuts will be comprehensive: 65% from manufacturing, 18% from sales and administration, and 17% from R&D — leaving no department untouched. In addition, Nissan will reduce its 17 global vehicle plants to 10 within two years, effectively closing more than 40% of its factories to raise utilization to 100% by 2027.
Notably, management hinted that domestic factories could also be shuttered — an unthinkable step that reveals the company’s unyielding determination to confront taboos.

This painful resolve was epitomized by the decision to cancel construction of a new EV battery plant in Kitakyushu, signaling a shift away from total in-house production toward strategic partnerships for cost efficiency.
Through such measures, Nissan aims to achieve ¥500 billion (≈$3.2 billion) in total rationalization, including a fundamental overhaul of its supply chain.

This is no mere “optimization,” as in previous reforms — it is a surgical restructuring for survival. The message is clear: Nissan has reached a point of no return.

After Ghosn: Years of Drift and the Limits of “NISSAN NEXT”

This massive restructuring is the inevitable consequence of years of managerial drift following the departure of former chairman Carlos Ghosn.
After Ghosn’s exit, Nissan struggled with a leadership vacuum and a lack of clear direction. The company’s reliance on sales incentives to chase short-term volume eroded its brand value and profitability, resulting in over ¥1 trillion in net losses between fiscal 2019 and 2020 — a devastating blow.

In response, Nissan launched “NISSAN NEXT” in 2020, a business reform plan focused on “optimization” and “selection and concentration.” It sought to reduce global production capacity by 20%, streamline models from 69 to fewer than 55, and establish a sustainable production scale of 5.4 million units per year.
The plan achieved partial success: fixed costs were cut by ¥350 billion, exceeding targets, and the company saw three consecutive years of revenue and profit growth.

However, the most crucial goal — an operating profit margin above 5% — remained unfulfilled, reaching only 4.5%. Sales volumes stagnated, particularly in China, where performance faltered.
In essence, “NISSAN NEXT” alleviated the symptoms of overcapacity inherited from the Ghosn era but failed to cure the disease of weak competitiveness.

Worse still, the company’s obsessive cost-cutting led to violations of Japan’s Subcontracting Law, after suppliers were unfairly pressured into price reductions — exposing the dark side of reform. The scandal highlighted that Nissan’s efforts were quantitative, not cultural, and lacked the deeper transformation of corporate mindset that true reform demands.

Renault Relations Rebalanced — A New Freedom in Management

The newfound ability to pursue reform without domestic or political restraint stems largely from Nissan’s dramatically redefined relationship with Renault.
When Nissan was near bankruptcy in 1999, it accepted Renault’s capital injection, effectively becoming a subsidiary. Renault’s 43.4% ownership stake, compared to Nissan’s 15% non-voting stake in Renault (under French law), created a deeply unequal partnership.

For years, this “parent-child” dynamic constrained Nissan’s autonomy. The influence of Renault — and by extension, the French government — loomed over key management decisions, including those affecting domestic employment and production.

That imbalance finally ended in February 2023, when the two companies struck a historic agreement: Renault reduced its stake in Nissan from 43.4% to 15%, matching Nissan’s own shareholding. Both sides now hold equal voting rights, capped at 15%.
This long-sought “equal partnership” granted Nissan unprecedented strategic independence, paving the way for the radical reforms of “Re:Nissan.”

Had the old hierarchy persisted, politically sensitive decisions — such as domestic plant closures — might have been blocked by Renault or the French government.
Today, however, the alliance has evolved from a top-down integration model to a flexible, project-based collaboration. Nissan’s decision not to invest in Renault’s new EV company “Ampere” exemplifies this shift.

For the first time in 25 years, Nissan can now make unconstrained strategic decisions — perhaps the most valuable outcome of its long alliance journey.

Betting on Survival in the EV Era — “The Arc” and Beyond

Despite its drastic measures, Nissan’s restructuring is not a retreat but a strategic reset for the future.
The cost savings from “Re:Nissan” will fund the company’s next midterm plan, “The Arc,” aimed at ensuring survival in the rapidly electrifying auto market.

Spanning fiscal 2024–2026, “The Arc” serves as a bridge between the restructuring under “NISSAN NEXT” and the long-term vision of “Nissan Ambition 2030.”
Its goals are bold: increase global annual sales by 1 million units and achieve an operating profit margin above 6% by 2026 — targets even higher than those missed in the previous plan.

Central to this strategy is a wave of new product launches: five new models in Japan (renewing 80% of its passenger lineup) and seven in North America.
The plan’s core mission, however, is strengthening Nissan’s competitiveness in electric vehicles (EVs). The company aims to cut next-generation EV costs by 30% compared to the current Ariya model and to match the cost of gasoline vehicles by 2030.

To achieve this, Nissan will introduce a new “family development” approach — designing multiple derivative models from a single base — to halve R&D expenses. It will also integrate powertrain platforms and adopt next-generation modular production systems to drive manufacturing innovation.

In short, Nissan is dismantling the legacy of its expansionist past and redirecting every resource toward a singular goal: EV leadership.
Whether this transformation leads to revival or ruin depends entirely on one question — can Nissan see its painful reform through to completion?