Nissan To Consolidate Thailand Production To Just One Plant

With the recent announcement that Nissan has ended merger talks with Honda, the Japanese automaker outlined its plans that will help save the company’s operations.

Nissan president and CEO Makoto Uchida remarked: “Nissan is fully committed to its turnaround actions, aiming to reduce costs by around 400 billion yen. We are dedicated to achieving a more efficient cost structure while driving top-line growth through enhanced competitive products that cater to the diverse needs of our customers. We are executing our turnaround—centered on efficiency and growth—with pace and purpose.”

4 Percent Operating Margin In 2026

Nissan plans to optimize its cost structure and reduce fixed and variable costs by a total of approximately 400 billion yen in fiscal year 2026 (FY26), which will reduce its break-even point in the automotive business in fiscal year 2026 from 3.1 million units to 2.5 million units. This will enable a stable operating margin of 4%.

More Than 300 billion Yen In Fixed Cost Reduction

In terms of fixed costs, savings of approximately 200 billion yen are targeted from selling, general, and administrative expenses (SG&A), about 100 billion yen from restructuring the manufacturing base, and around 30 billion yen from development efficiencies.

Nissan plans to reduce 2,500 global indirect employees by streamlining operations, implementing hiring reductions, and accelerating voluntary separation programs. Nissan will achieve reductions in unit labor costs with additional measures including expansion of shared service centers by 1,000 positions and prioritized fixed marketing expenses.

Nissan aims to achieve approximately 100 billion yen in savings by consolidating production lines, adjusting shift patterns, and transferring jobs, starting with three plants in Q1 FY25: Smyrna and Canton plants in the U.S., and in Thailand. This rightsizing will reduce headcount in vehicle and powertrain plants by 5,300 in FY25 and 1,200 in FY26, contributing to a total reduction of 6,500. These production savings will be complemented by new engineering and operational efficiencies, including in the launch of new models and in reducing CAPEX and costs for product introductions.

Thailand Production To Be Consolidated To One Plant

With this announcement, Nissan Philippines, Inc. has also revealed that since there are two manufacturing plants in Thailand, the plan is to consolidate production to just one manufacturing plant:

“As part of Nissan’s global turnaround measures and ongoing business transformation in ASEAN and Thailand, Nissan is consolidating part of vehicle production in Thailand’s Plant #1 to Plant #2 and upgrading the lines starting from Q1 FY2025. This effort aims to optimize fixed costs as well as prepare for future model localization in Thailand. 

Plant line #1 will be closed for vehicle assembly and the facility will be used for body and press shops and operations logistics. 

Thailand will remain a key market for Nissan in Southeast Asia, and the company continues its commitment to grow its business and brand in ASEAN and Thailand markets.”

In terms of restructuring its manufacturing base, Nissan plans to reduce its global production capacity by 20% and optimize its manufacturing workforce by fiscal year 2026. This includes a capacity reduction already implemented in China from 1.5 million units to 1 million units. It will combine with ongoing efforts that will reduce capacity from 3.5 million units to 3 million units for plants outside China and increase the plant utilization ratio from 70% in fiscal year 2024 to 85% in fiscal year 2026. In total, including plants in China, Nissan is aiming to reduce global production capacity from the current 5 million units to 4 million units by fiscal year 2026.

100 Billion Yen In Variable Cost Saving

Nissan aims to reduce design-driven costs by approximately 60 billion yen, starting with the simplification of design (adjusting model performance and content) across its six major global products. Various initiatives for manufacturing operational cost reductions include reducing parts complexity by up to 70%, improving production planning to eliminate supply chain inefficiencies and lower warehouse costs, and enhancing efficiency while reducing costs in after-sales parts warehousing. Through these combined efforts, Nissan targets a total cost reduction of around 100 billion yen.

New, Electrified Models

To ensure revenue growth, Nissan will provide a suite of products equipped with differentiated technologies tailored to global customer needs.

To further enhance its offerings, the company will introduce new plug-in hybrid models in FY25 and FY26, and refresh its award-winning mini vehicles and large minivans. Nissan will also strengthen its zero-emission EV lineup with the new LEAF, an all-new compact EV, and a new NEV targeted at the Chinese market.

The contribution to sustainable profitable growth is exemplified by third-generation e-Power models. The third generation hybrid drivetrain promises to offer significant improvements, including 20% improved fuel efficiency and a 20% reduction in cost compared to the first generation. In particular, fuel efficiency at high speeds has been improved by 15% compared to the second generation, achieving top-class fuel efficiency in Europe and significant improvement in the U.S.

Nissan’s future profitability will also depend on technical innovation, with an increased focus on intelligent vehicles. Unique intelligent cockpits and driver assistance features will be introduced in models planned for launch by fiscal year 2026. In the coming years, Nissan aims to democratize door-to-door autonomous driving and offer driverless mobility services in Japan with plans for commercialization by fiscal year 2027.

This combination of new model launches, market expansions, and strategic initiatives will drive top-line growth in fiscal years 2025 and 2026, with a plan for volume sales increases through model replacements and expansion into new segments.

Asset Optimization

By seizing every possible measure for improvement, Nissan will build on its current measures to proactively advance the next phase of its restructuring. Nissan will review its market presence and determine where to remain, outlining an operational strategy for the rest of the markets. The company will also optimize core products, platforms, and powertrains to prioritize and streamline investments. Meanwhile, Nissan will accelerate collaborative projects with its Alliance partners Renault and Nissan, together with a partnership with Honda signed in 2024 for the development of electric vehicles (EVs) and software-defined vehicles (SDVs), and other partners.

Nissan has already begun implementing the initiatives mentioned above and plans to provide further updates within a month.