France-Japan

Carmaker Nissan's first losses hit Renault

Article published on the 2009-02-09 Latest update 2009-02-09 17:42 TU

New Nissan Motor Co cars at the company's factory in Yokosuka, Japan.
(photo: Reuters/Toru Hanai)

Nissan Motor Co. of Japan has announced its first annual loss since 1999. The firms say it will shed 20,000 jobs, and cut directors' pay by ten percent, as well as scrapping their bonuses for the year. Nissan will suspend participation in a new factory with French partner Renault. France's president Nicolas Sarkozy has announced 6.5 billion euros in loans to Renault and Peugeot-Citroën.

"The global car industry is in turmoil. Nissan is no exception," said Carlos Ghosn, at the helm of the Japanese carmaker for ten years, and also head of Renault. Ghosn added that Nissan had been surprised by the extent of the global economic crisis.

Ghosn says Japan's economy has been hit in three ways: credit crunch, economic slump and a strong currency. The effect on Nissan will be a cut in global production of 20 per cent this year, after sales for the third quarter fell by more than eighteen per cent over last year.

Japan's third largest auto firm, expects to show a net loss of 265 billion yen, or 2.2 billion euros in this past financial year to March. Last year, Nissan made a profit of 482 billion yen.

Forty-four per cent of Nissan is owned by French firm Renault, which Ghosn took over in 2005.

Nissan said it will continue participation with Renault in a joint factory in the southern Indian city, Chennai, but is production targets will be lower than planned.

However, plans to build a new factory in Morocco with the French manufacturer are being put on hold.

Nissan intends to go ahead with production of environmentally friendlier electric cars next year.

Meanwhile, France is giving a helping hand to its auto industry where one French worker in ten is employed. The French government says it will lend 6.5 billion euros to carmakers Peugeot-Citroen, Renault, and Renault Trucks, in exchange for a pledge to keep French plants open, President Nicolas Sarkozy said on Monday.

Renault and Peugeot Citroen will each receive three billion euros, while Renault Trucks, which is owned by AB Volvo of Sweden, will receive half a billion euros. 

Sarkozy also announced a doubling of state aid to auto industry suppliers,

The state will also double to two billion euros a package of aid to the financial services arms of Renault and Peugeot-Citroen, he said.