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All three of Japan’s largest carmakers are struggling with tough market conditions in the world’s two largest economies. In the U.S., tariffs have roiled their global supply chains, and in China, they face competition from domestic car companies that sell next-generation electric vehicles at cutthroat prices.
Nissan announced it would continue its broad, companywide cost-cutting measures on Tuesday. The Japanese carmaker will eliminate 11,000 additional jobs, after it had previously announced it intended to cut 9,000 roles. That brings Nissan’s total layoffs to 20,000.
The past year has been extraordinarily difficult for Nissan. During its latest fiscal year, which ended March 31, Nissan saw its operating profit fall by 88% to $472 million. The company closed the year with a net loss of $4.5 billion. Earlier this year, Nissan replaced its CEO Makoto Uchida over dismal financial results and saw a proposed merger with Honda fall apart. Credit rating agency Moody’s downgraded Nissan’s credit to junk status.
New CEO Ivan Espinosa, who was formerly chief planning officer, now faces the daunting task of reviving the carmaker’s fortunes.
“Our full-year financial results are a wake-up call,” Espinosa told the press. “The reality is very clear.”
While Nissan’s performance is especially dire, Japanese carmakers as a whole are starting the year with dim financial prospects stemming from President Donald Trump’s tariffs. Toyota and Honda, the two largest Japanese car companies, slashed their full-year guidance, making them the latest examples of how global disruptions to trade are starting to hit the company’s income statements.
Last week, Toyota said it expected profits for its current financial year to drop 21% because of tariffs and the falling U.S. dollar. Its erstwhile rival Honda, which reported earnings the same day as Nissan, said its full-year profits would take an even bigger hit. Honda lowered its annual forecast 59%. On Tuesday, when it announced its full year financial results, Nissan did not offer guidance for 2025 for operating profit and net income citing “uncertainty related to tariff environment.”
Toyota, Honda, and Nissan did not respond to a request for comment.
Nissan has struggles that are both endemic to the car industry and of its own making. Like many of its peers, it is facing major headwinds in its two largest markets, the U.S. and China. In the U.S., Nissan faces the prospect of crippling tariffs on auto parts and all other imports. Nissan is more vulnerable than its Japanese competitors Toyota and Honda because it makes a greater percentage of its cars in Mexico, which was specifically targeted with 25% tariffs on imported cars. The new duties risk raising costs at a time the automaker is engaged in a widespread effort to lower them across the company.
Some carmakers are already reevaluating where and when they will build new manufacturing plants to respond to the U.S.’s tariffs and the broader uncertainty they’ve caused. Honda reportedly decided to move a new plant that would make its signature affordable Civic model from Mexico to Indiana, according to Reuters.
“The impact of tariff policies in various countries on our business has been very significant, and frequent revisions are made, making it difficult to formulate an outlook,” Honda CEO Toshihiro Mibe told reporters.
Both Honda and Nissan also announced their intentions to scrap plans for factories related to electric-vehicle production. Honda will postpone its plans to build an electric-vehicle factory in Canada for about two years. Canada is also subject to targeted 25% tariffs on car imports. “The company will continue to evaluate the timing and project progression as market conditions change,” a Honda spokesperson told Fortune.
Meanwhile, Nissan abandoned plans for a $1.1 billion electric-vehicle battery factory in Japan altogether. As part of its broader cost-savings work, Nissan is reducing the number of manufacturing plants from 17 to 10.
Toyota and Nissan did not respond to requests for comments.
With trade policy making the U.S. market a challenge, in China, carmakers face threats from domestic competitors that sell equal or better cars at a much lower price. Chinese car companies have started releasing cheap, high-quality electric vehicles. Many of these products caught foreign automakers off guard, leaving them scrambling to catch up. As the world’s largest auto market, falling behind in China can have severe consequences for global car companies—all the more so, if they face headwinds in the U.S.
The stiff competition for the raft of affordable electric vehicles made by domestic manufacturers has forced the Japanese car companies into a price war. So far, they have taken heavy casualties. All three Japanese carmakers had declining sales in China for the last three years. Honda saw its Chinese sales fall 31% in 2024, selling less than a million cars in the country for the first time in nine years. Nissan’s sales fell 12% in the year. Toyota has fared slightly better, only seeing declines of 7%.
To try and turn around its sales slump in China, Honda pivoted its business in the country to focus more heavily on electric vehicles. Honda reduced the amount of international combustion engine cars it will make in China. Toyota has been hesitant to rush headfirst into the electric-vehicle trend. In fact, much of its strategy over the last decade has been centered around developing hybrid vehicles that run on both gas and electricity. That strategy worked rather well across the world, insulating Toyota from the steep decline in electric-vehicle sales that hit the U.S. and other parts of the world last year.
However, China hasn’t seen such a slowdown. Electric-vehicle sales are set to overtake those of traditional cars by the end of this year, according to some estimates. Now, Toyota is rushing into the Chinese market with its own cheap electric SUV, priced at $15,000.
Meanwhile, Nissan has plans to flood the Chinese market with a lineup of new cars. In April, Nissan announced it would invest $1.4 billion into the Chinese market and launch 10 new vehicles. Nissan’s China head Stephen Ma said the company had been “slow” in the China market.
“The Chinese brands were too fast, to be honest,” Ma said at a Shanghai auto show in April. “They were exceptional in how fast they moved. It took everybody by surprise. Now I think we have reset.”
This story was originally featured on Fortune.com
