Nissan Motor Company on Monday announced 20 000 job cuts and warned of its first annual loss since Carlos Ghosn took the helm of the Japanese automaker almost a decade ago.
Nissan blamed the global economic crisis for an expected net loss of 265 billion yen (2.9 billion dollars) in the financial year to March - a dramatic reversal from the previous year's profit of 482 billion yen.
The company will scrap its directors' bonuses this year and cut their pay by 10% from March. It will also reduce its investment, suspending its participation in a new factory in Morocco with French partner Renault.
Ghosn said the depth of the global economic crisis had surpassed Nissan's expectations.
"The global auto industry is in turmoil. Nissan is no exception," said Ghosn, who also heads Renault.
Nissan posted a net loss of 83.2 billion yen for the fiscal third quarter and Ghosn said Japanese companies were being hit by a triple whammy of a credit crunch, an economic slump and a strong yen.
"This recession is, frankly, equal to none I know in the past," he said.
Japan's third-largest automaker, which is 44% owned by Renault, said it would slash its global workforce by 8.5% to 215 000 in the next financial year to March 2010.
It forecast an operating loss of 180 billion yen this year - its first since Renault parachuted in Ghosn as chief operating officer in 1999 to help rescue the company from the brink of bankruptcy.
"In 1999 Nissan had a crisis. Nissan was doing badly while most of the other car manufacturers were doing very well. Today everybody has a problem," said Ghosn, who became president of the Japanese automaker in 2000.
In 2005 Ghosn also took over the reins of Renault, but has denied suggestions that he may have overstretched himself by taking the two top jobs, blaming the current problems on an industry-wide slump, rather than management failures.
Nissan logged an operating loss of 99.2 billion yen in the third quarter as revenue tumbled 34.4% to 1.82 trillion yen. It sold 731 000 vehicles worldwide in the quarter, down 18.6% from a year earlier.
The automaker is cutting its global production by 20% this financial year compared with its previous target, to meet sharply weaker demand.
'Won't last forever'
Nissan said it would continue participation with its French partner in another joint factory, in the southern Indian city of Chennai, but will scale back plans to step up production there. Other planned cost-cutting measures include suspending sponsorship of corporate sports teams in Japan.
Ghosn said Nissan had no plans to shut existing plants permanently.
"We don't think this crisis is going to last forever," he said. "You still have potentially very strong demand in countries like China, India, Russia, Brazil, the Middle East and Eastern Europe."
Nissan, which was slower than rivals Toyota and Honda to embrace fuel-sipping petrol-electric hybrids, said it was still determined to take a lead in zero-emission cars and will start producing electric vehicles in 2010.
"Affordable fuel-efficient cars are the right products for a time of global economic crisis and we are moving forward rapidly with our plans to produce them," Ghosn said.
Mamoru Kato, a senior auto analyst at Tokai Tokyo Research Centre, said that Nissan needs to take drastic action to protect its alliance with Renault.
"In the alliance with Renault, Nissan has been required to take a lead in markets in Japan and North America while its French partner covers Europe. Now that demand in North America is crashing, it is also lowering the value for Renault of keeping Nissan as a partner," Kato said.