Major Tech Giant Car Company Announces 20,000 Layoffs – What Triggered the Decision?

In the wake of ongoing global economic challenges and tumbling vehicle sales, Japanese auto giant Nissan has announced a major restructuring move, which includes cutting 20,000 jobs—15% of its global workforce—and closing seven manufacturing plants worldwide.

This decision comes amid a broader slowdown across industries, with tech heavyweights like Apple, Samsung, and Google already initiating mass layoffs. The auto sector is now facing similar pressure, as waning demand and shrinking profits force even the most established manufacturers to make tough calls.

Sales Slump in Key Markets

The turning point for Nissan began with a significant drop in sales, particularly in its two largest markets: the United States and China. In November, the company reported a staggering 94% decline in profits for the first half of the fiscal year, attributing the drop to weak demand and deep discounting. Initially, this led to plans to lay off around 9,000 employees. However, the company has now doubled that figure.

Japan’s NHK broadcast network confirmed that Nissan’s layoffs would now impact 20,000 employees—amounting to 15% of its total global staff of approximately 133,500 people. A majority of these layoffs, about two-thirds, are expected to come from manufacturing roles, with the remainder affecting sales, administration, research, and contract positions.

Global Plant Closures and Investment Cuts

Alongside the layoffs, Nissan will shut down seven of its 17 production facilities, reducing its global manufacturing footprint by more than 40%. While the specific plants affected have not been officially disclosed, concerns have been raised over whether key locations such as the Sunderland plant in the UK—home to around 6,000 workers—will be impacted.

The UK government has stated that the Sunderland facility is of “vital importance” to the northeast region and that it would “engage closely with Nissan over its restructuring plans.”

Mounting Financial Losses

In terms of financial performance, Nissan ended the last fiscal year with a reported loss of 670 to 750 billion yen, or roughly $4.5 to $5.08 billion. CEO Ivan Espinosa, who recently replaced former chief Makoto Uchida, did not mince words while describing the state of the business. “Our financial results for the full year are a clear signal—an urgent reminder that change is essential,” he said, highlighting that “rising costs and fixed expenses are outpacing what our current revenue can support.”

Adding to the company’s woes are U.S. tariffs introduced during Donald Trump’s presidency, which have further tightened margins. Due to the “uncertain nature of U.S. tariff measures,” Nissan has chosen not to provide income forecasts for the upcoming fiscal year.

Scrapped Merger Plans and Future Outlook

Earlier this year, a potential game-changing merger between Nissan, Honda, and Mitsubishi collapsed. The ambitious plan aimed to create a $60 billion automotive conglomerate—one that would have ranked as the fourth-largest in the world by vehicle sales, behind Toyota, Volkswagen, and Hyundai. However, talks broke down due to disagreements on financial terms and strategic direction.

This failed alliance, along with the broader industry shift toward electric vehicles (EVs), has prompted Nissan to rethink its investment strategies. Just last week, the company canceled plans to build a battery and EV manufacturing plant in Japan. The decision aligns with its broader goal of reducing expenditures as market conditions grow more uncertain.

In China, foreign automakers like Nissan are struggling to compete with homegrown players such as BYD, which have taken a dominant lead in the EV sector. China has become the largest EV producer globally, outpacing many traditional carmakers that were slow to embrace the transition to electric mobility.

Meanwhile, in the U.S., although Nissan’s retail sales showed slight improvement last year, the market overall has been dampened by high inflation and increased interest rates, affecting consumer purchasing power.

Recession Ripples in India Too?

The effects of this global downturn are also being felt in India, where automakers like Tata Motors and Mahindra are under pressure. Tata Motors’ stock has seen a prolonged decline due to weakening demand. Industry experts warn that if market conditions do not stabilize soon, Indian automakers may also be forced to consider layoffs.