Japan is at one of the most difficult stages in recent decades. Shortly after his appointment, the new CEO, Ivan Espinosa, indicated that he had completed the management team ' s set-up and initial self-help programme in about six weeks. For this Japanese car company, the problems come from a number of directions, including a slowdown in the Chinese market, an increase in United States tariffs and a decline in profitability.
Reorganization begins at cost.
Espinosa took over as CEO this year. Prior to that, negotiations for a merger between Honda and Japanese production broke down, and the former Ueda left. By the time Espinosa took over, daily production had been continuously under financial pressure, loss of market share and declining brand attractiveness.
In his judgement, the idea that Japanese production had sought to cover costs through increased sales was no longer sustainable. Companies need to reduce their cost structures first than continue to bet on scale.
In May of this year, the Japanese-language reorganization plan, known as Re:NISSAN, was designed to reduce the cost of 500 billion yen and restore business profits by early 2027. To achieve this goal, the company plans to reduce 20,000 jobs and to reduce the number of factories from 17 to 10.
- Cost reduction target: 500 billion yen
- Size of planned staff reductions: 20,000
- Number of factories: from 17 to 10
Since then, Japanese has declared the closure of an old factory in Shinagawa, Japan, and has sold parts of facilities in South Africa and Mexico. Espinosa stated that these decisions were difficult, but management considered it important to implement them as soon as possible.
Shorten the R & D cycle with AI
At the end of the product, Espinosa tried to speed up the development tempo. Previously, a new daily car had a development cycle of approximately four and a half years. The company has now reduced its cycle to three years and then further reduced it to more than two years.
As a result, some of the traditional design processes have been reduced and more digital tools and AI have been used. Espinosa states that AI has been used in the early stages of the design to help teams generate inspiration and sketch directions, but not entirely to replace human designers.
His long-term responsibility for product planning has also made him more inclined to drive change in terms of model, platform and client needs. In addition to compressing the R & D cycle, Japanese production hopes to refocus its attention on the product itself in order to restore consumer interest in the brand.
China and the U.S. have been the two tests.
The external pressures on Japanese production are currently concentrated in two major markets, China and the United States. The Chinese market has long been an important source of profits for foreign-owned firms, but the rapid rise in the brand name of local electric cars in recent years has led to lower prices and closer configuration to local demand, forcing foreign-owned firms, such as Japanese-owned cars, to lose their advantage.
Espinosa responded by introducing a more thorough Chinese localized model. N7 The electric sedan was developed by Japanese production in cooperation with the East Wind for a 24-month research and development cycle. Design and engineering work was carried out mainly by the Chinese team, with some of the versions starting at a low price of RMB 11.99 million, directly against the local electric vehicle brand.
At the same time, tariffs imposed by the United States on Japanese cars have created new pressures on Japanese production. The report mentions that the Trump Government, which for one time increased Japan ' s motor vehicle tariffs to 27.5 per cent and then negotiated to 15 per cent, is still significantly higher than the previous 2.5 per cent. This has further tightened the operating environment for Japanese production in the United States market.
Espinosa now sums up the recovery approach in three points: repairing the cost structure before taking clients back to the exhibition hall, and strengthening partnerships with Renault and East Wind in exchange for speed and scale. He also promoted more open internal communication mechanisms, seeking to improve staff sentiment and reduce the long-standing style of closed management of companies.