Japanese car giant Nissan has recently announced sweeping closures of factories and significant job cuts worldwide, reflecting a company grappling with profound challenges. This major restructuring marks a decisive shift as Nissan attempts to navigate declining sales, rising costs, and an increasingly volatile global automotive market. The repercussions of these moves are particularly worrying for workers and local economies dependent on Nissan’s manufacturing footprint.

Early warning signs from 2020

The seeds of Nissan’s current predicament were sown back in fiscal year 2019. The company’s global vehicle sales fell by over 10% to just under 5mn units, with major slowdowns across critical markets like China, North America, and Europe, according to their 121st shareholder business report in 2020. On top of that, the onset of the COVID-19 pandemic further depressed demand, compounding an already difficult environment. Financially, Nissan recorded both operating and net losses, dragged down by shrinking revenues, rising expenses, and restructuring costs linked to a broad business overhaul.

To combat these issues, Nissan unveiled the "NISSAN NEXT" strategic plan. The aim was to slash production capacity by shutting plants in Indonesia and Spain’s Barcelona, concentrating efforts on core markets such as Japan, China, and North America, and pulling back from less profitable regions like South Korea. Alongside cutting costs, the strategy emphasised electrification and the deployment of advanced driver-assistance systems, with intentions to launch multiple new electric and hybrid vehicles. Nissan projected a return to profitability by fiscal 2023, targeting a 6% share of the global auto market and healthier operating margins.

Despite the ambitious plan, early signs of trouble persisted, showing that the road ahead would be far from smooth.

The current crisis: factory closures and job losses

Fast forward to 2025, and Nissan has escalated its restructuring with a drastic announcement: it will cut around 11,000 jobs globally and close seven manufacturing plants. This follows earlier layoffs of roughly 9,000 employees announced the previous year, bringing the total workforce reduction to approximately 20,000 — about 15% of its entire global staff, according to BBC.

The cuts come amid faltering sales in China and heavy discounting in the United States, the company's two biggest markets. The collapse of merger talks earlier this year with Honda and Mitsubishi further weakened Nissan’s position, scuttling plans for a combined entity that would have ranked as the world’s fourth largest automaker by sales. The failure of this alliance, intended to strengthen competitiveness especially in China, has left Nissan increasingly isolated.

While the exact locations of the upcoming job cuts have not been fully detailed, there is uncertainty about the future of Nissan’s Sunderland plant in the north east of England, which currently employs about 6,000 people. The UK government has described the facility as “vital” to the region and pledged to engage with Nissan over its restructuring plans.

Two-thirds of the job losses will reportedly hit manufacturing roles Much of the rest will affect different sectors including sales and contract workers. Such significant reductions add pressure to the already strained job market, particularly in communities heavily reliant on automotive manufacturing.

Factories closing: from Wuhan to Smyrna and beyond

Some of Nissan’s plant closures are already underway or confirmed. In China, the Wuhan facility—opened just three years ago in 2022—will cease automobile production by the end of fiscal 2025, as reported by The Japan News. Despite being a major plant with a capacity for 300,000 vehicles annually, production there had fallen to less than 10% due to sluggish sales and intense competition from domestic Chinese brands. The Wuhan plant had been producing key models like the Ariya electric vehicle and the X-Trail SUV, yet annual output hovered around a mere 10,000 units in recent years.

Nissan also shut down another Chinese plant in Changzhou in mid-2024, reducing its number of Chinese production bases to four. The company had already cut its production capacity in China from 1.5mn to 1mn units annually, reflecting a market contraction.

In Thailand, The Nation reported that Nissan will shut one of its two Thai factories in Samut Prakan, consolidating production at the remaining site, which builds up to 150,000 vehicles annually. The closed plant, previously assembling several models, now only produces the Almera and Kicks—both of which will shift to the second facility, alongside the Navara and Terra.

Across the Atlantic, The Tennessean reported that Nissan’s largest US factory in Smyrna, Tennessee, employs more than 5,700 workers and produces popular models such as the Rogue SUV and the Leaf electric car. While Nissan has not confirmed if Smyrna will close, the plant’s production lines were initially slated for reduction. However, Nissan reversed this plan to maintain two production lines to maximise tariff-free domestic output amid increasing trade tensions.

Overall, Nissan intends to reduce the number of its manufacturing plants worldwide from 17 down to 10. This consolidation effort, alongside streamlining parts complexity by 70%, aims to trim costs and improve efficiency, but it comes at the expense of thousands of jobs.

The tariff turmoil and financial strain

A major challenge accelerating Nissan’s woes is the imposition of new tariffs, particularly in the United States, on imported vehicles and parts. These levies not only force Nissan to raise prices for American consumers but also increase production expenses at its US factories. The company's operating profit margin in North America deteriorated dramatically from a positive 4.6% to a negative 0.5% in the last fiscal year, despite a rebound in sales volumes.

In response, Nissan has been implementing mitigation strategies aimed at softening a potential $3bn hit from US tariffs, as reported by Supply Chain Dive. These include increasing production in the US, shifting tariff-affected models to other markets, and closely working with suppliers to minimise costs. The company has notably opted to keep both production lines open in Smyrna to sustain tariff-exempt manufacturing volumes. However, the ongoing uncertainty surrounding trade policies, particularly with China and Europe, makes future planning difficult.

The overall financial picture remains bleak. Nissan is forecasted to post its worst-ever deficit for the fiscal year ending March 2025, estimated at around JPY750bn (roughly $4.8bn). Leadership acknowledges that fixed costs currently outpace revenues and that the year ahead will be one of transition, fraught with uncertainty.

Nissan’s current crisis is the result of earlier strategic errors, intensifying global competition, declining demand in key markets, stalled merger efforts, and mounting trade barriers—forcing it into painful cost-cutting measures. The ongoing closures and layoffs mark a sharp retreat for a company once known for its global ambition. More broadly, it highlights the urgent need for legacy carmakers to adapt swiftly or risk irrelevance in a landscape shaped by electrification, geopolitical tension, and disruptive challengers. The coming years will be critical not only for Nissan’s survival but for the thousands of workers and communities intertwined with its fate.