Things Are So Bad at Nissan It's Turning to Mitsubishi for Help

Nissan is taking drastic action to save money as sales decline. It plans to cut 9,000 jobs, reduce its production capacity, and sell a portion of its stake in Mitsubishi. Nissan still plans to launch 30 new or updated models, but they might be delayed.

Nissan is cutting back as it struggles to profit amid falling demand. The automaker plans to cut 9,000 jobs, reduce its global production capacity by 20 percent, and sell a third of its stake in Mitsubishi to cut costs. The company believes it could save itself $3 billion as it reevaluates the roadmap it presented earlier this year.

The automaker still plans to launch the 30 new or updated vehicles it has proposed, but they might arrive later than initially planned as Nissan focuses on its financial health. The 20 percent reduction in its global capacity of five million units annually will better align its output with its sales.

Nissan didn't provide a timeline for laying off employees or reducing its production capacity. The automaker said its operating profit plunged 85 percent in the third quarter, with the company earning a net loss of ¥9.3 billion ($60.1 million at today's exchange rate).

Global sales were down for the company by 2.8 percent from July to September. While they didn't dip as far in the United States—down 0.2 percent—Nissan piled on the incentives to help dealers sell vehicles, costing the company ¥25.7 billion ($167.7 million).

The automaker has taken drastic measures in the last few months to sell cars and align production with demand. It cut output of its best-selling Rogue in September, along with the Frontier, as its dealers dealt with bloated inventories. It's also asked dealers to sell cars at a loss, hurting their profitability.

Nissan CEO Makoto Uchida is also taking a 50 percent pay cut as a form of accountability for the company's current struggles. The sale of a portion of its stake in Mitsubishi Motors would put about ¥68.6 billion ($448 million) back into its coffers, though Nissan plans to continue to rely on both of its Alliance partners, Mitsubishi and Renault.

The company has many new and refreshed products coming that could help reverse the financial struggles, but it'll be a challenging road ahead. Automakers worldwide are struggling due to increasing competition, stagnating demand, and rising costs.