Woes continue at Nissan: Recalls and downsizing

March 31, 2007
By Ken Worsley

In February, Nissan warned investors that due to lackluster domestic sales, net profits were expected to slide by over 11 percent in the year to March 2007. Then, two weeks ago the automaker announced that it would be slashing domestic production for at least six months starting from April.

Since then, the news coming from Nissan hasn’t gotten any rosier. On Tuesday the automaker announced that it intended to halve the size of its domestic workforce, currently at 2,300, by 2010.

And yesterday, Nissan announced that it would recall more than 1 million March and Cube compact cars to fix faulty fuel tanks, which will cost the company somewhere in the neighborhood of 3 billion yen ($25 million). Nissan has said that the cost of the recall would be covered by cash reserves that were set aside for dealing with quality issues.

The recall is not expected to be any effect on the company’s earnings, though Nissan is expected to show its first earnings drop in seven years for fiscal 2006.

Filed Under Automotive