Nissan Motor Co. has forecast its largest annual net loss ever, anticipating a staggering deficit between 700 billion and 750 billion yen ($4.91 billion–$5.26 billion) for the fiscal year ending in March. The revised projection, issued on Thursday, marks a dramatic downturn from its previous forecast of an 80 billion yen loss. This financial blow comes amid massive restructuring efforts under newly appointed CEO Ivan Espinosa, as the automaker struggles to recover from years of stagnation and declining competitiveness.

Massive Impairment Charges Across Key Markets

The Japanese carmaker attributed the bulk of its financial hit to sweeping impairment charges across North America, Latin America, Europe, and Japan. These impairments exceeded 500 billion yen and stemmed from a comprehensive review of Nissan’s global production assets. The restructuring plan also includes an additional 60 billion yen in related costs, which encompass workforce reductions, manufacturing capacity cutbacks, and plant closures.

Espinosa, who assumed the CEO role earlier this month, emphasized the necessity of reevaluating the company’s operations. “We are taking the prudent step to revise our full-year outlook, reflecting a thorough review of our performance and the carrying value of production assets,” he explained in a formal statement.

Restructuring Gains Urgency Amid Weak Performance

The drastic financial revision underscores the severity of Nissan’s ongoing challenges. Once a global industry powerhouse, the automaker has lost ground over the past decade, hindered by strategic missteps, stiff competition, and eroding profit margins. Espinosa’s turnaround strategy includes aggressive cost-cutting measures, reducing production footprints, and streamlining operations across underperforming regions.

This latest financial announcement signals a turning point for Nissan, as it confronts painful but necessary structural reforms to regain long-term profitability. The company has already begun reducing its global workforce and scaling back manufacturing output in key markets. Plant closures are expected to follow, though specific locations have not been publicly confirmed.

Terminated Merger Talks with Honda Underscore Strategic Divergence

Adding to Nissan’s volatile corporate narrative is the recent collapse of merger discussions with fellow Japanese automaker Honda. The two companies had explored the possibility of forming a $60 billion automotive alliance, which could have positioned them more competitively against international rivals. However, the talks fell apart in February after Honda proposed making Nissan a subsidiary—a condition that sources say Nissan firmly rejected.

The failed merger highlights ongoing disagreements over governance and strategic direction between the two companies. Despite the setback, Espinosa has indicated that Nissan will continue seeking partnerships and alliances that align with its renewed business priorities.

Diminished Operating Profit Forecast and Canceled Dividend

Nissan also slashed its full-year operating profit forecast to 85 billion yen—roughly 30% lower than previous expectations. The revision reflects weakening performance across multiple regions and the strain of restructuring initiatives on short-term profitability.

Moreover, the company announced it will not issue a dividend for the fiscal year, signaling a conservative financial stance as it prioritizes reinvestment and stabilization over shareholder returns. Investors, already wary of the company’s declining stock value, will be watching closely when Nissan officially reports its earnings on May 13.

Background: A Long Road of Decline

Nissan’s current woes trace back to a series of misfortunes and leadership challenges over the past decade. The 2018 arrest of former chairman Carlos Ghosn triggered a period of intense scrutiny and internal upheaval. Since then, the company has struggled to rebuild credibility and momentum, even as rivals like Toyota and Hyundai expanded their global footprints and advanced in electric and autonomous vehicle technologies.

In recent years, Nissan has also lost ground in the lucrative U.S. and Chinese markets, where its models have failed to resonate with changing consumer preferences. Cost structures bloated by overproduction and underutilized factories have further eroded its bottom line.

The global chip shortage and supply chain disruptions during the COVID-19 pandemic added more strain, delaying production and reducing inventory across dealerships. Meanwhile, competition from EV-first companies such as Tesla has intensified, leaving Nissan with little room for error.

Espinosa’s Strategy: Cut, Consolidate, Compete

Espinosa’s appointment as CEO marks a pivotal shift in Nissan’s leadership approach. Known internally for his operational discipline and product expertise, Espinosa aims to reposition the company as a leaner, more agile automaker. His restructuring blueprint involves optimizing Nissan’s vehicle lineup, focusing on higher-margin models, and boosting investment in next-generation EV platforms.

Analysts have mixed views on how quickly the turnaround plan can deliver results. While many applaud the company’s willingness to take painful but necessary steps, others remain skeptical about Nissan’s ability to regain lost market share in a rapidly evolving auto landscape.

“We see this as a reset moment,” said industry analyst Akira Matsumoto. “The losses are massive, but the acknowledgment of deep-rooted problems is the first step toward healing.”

The Road Ahead: Can Nissan Recover?

Despite the grim financial outlook, Nissan’s leadership insists that the company has laid the groundwork for a more stable future. With a clear focus on restructuring, revitalizing product lines, and navigating away from legacy inefficiencies, the automaker hopes to pivot toward growth in emerging markets and capitalize on the global shift toward electric mobility.

Much now depends on whether Espinosa’s strategy can deliver measurable results over the next few quarters. Investors will be looking for signs of profitability, improved asset utilization, and a more cohesive global strategy.

As the auto industry races into an electrified, autonomous future, Nissan finds itself at a crossroads—one marked by deep losses but also potential for reinvention.