Nissan has more than doubled its number of planned job cuts to 20,000, while Honda has estimated a $3 billion (€2.7 billion) blow from US tariffs will cut annual profits by more than half, as leading Japanese carmakers struggle with restructuring and fallout from the trade war.
Yokohama-based Nissan announced a drastic update on Tuesday to its emergency turnaround plan, which includes reducing the number of factories from 17 to 10 by the 2027 fiscal year. The new job loss figure amounts to 15 per cent of its workforce.
At the same time, Honda estimated a hit from tariffs of 650 billion yen (€4 billion) but said it believed it could offset about 200 billion yen through countermeasures, such as adjusting production to minimise the tariff impact. As a result, annual operating profit would fall 59 per cent to 500 billion yen in the 12 months ending in March 2026 from 1.2 trillion yen in the previous year.
“The impact of tariff policies is huge,” said Toshihiro Mibe, chief executive, adding that its modelling represented a worst-case scenario. “This is the bottom. I think the tariff impact will continue to change as time goes by.”
Even as the US has toned down tariffs against China, the automotive industry is still suffering from levies in excess of 25 per cent on finished car imports, as well as further tariffs on certain components and raw materials such as steel and aluminium.
Nissan estimated a hit from the tariffs of 450 billion yen in the current fiscal year before mitigation, which it expects to lead to a 30 per cent reduction in their impact.
The group, whose merger with Honda fell apart earlier this year, has increased its cost-savings target to 500 billion yen through the headcount reduction and factory closures.
Guidance for the current financial year was suspended due to tariff uncertainty, after Nissan slumped to a full-year net loss of 670 billion yen, down from a profit of 426 billion yen a year earlier, in part due to substantial restructuring costs.
“Our full year financial results are a wake-up call,” said Ivan Espinosa, Nissan chief executive. “The reality is clear that we have a very high cost structure. To make matters more complicated, the global environment is volatile.”
The heavy blow from tariffs and the slow pace of the shift to electric vehicles also led Honda to delay an $11 billion investment in electric vehicle (EV) and battery factories in Canada. The plans were announced 13 months ago.
“In North America, the EV market growth is slowing down so as of now, we think we should postpone at least for two years,” said Mr Mibe.
The earnings hits compare to General Motors and Ford warning of an impact to profits of up to $5bn and $1.5bn, respectively, due to levies on imports. The US manufacturers’ financial year runs to the end of the year, whereas Honda’s and Nissan’s ends next March.
Last week, Toyota revealed US tariffs would hurt profits by $1.2 billion in April and May, while on Monday, Mazda suspended its guidance for next year but estimated a monthly level of tariff impact that would essentially wipe out all profits if continuing at that rate.
To mitigate the impact of the levies, Honda’s Mibe said it had brought vehicles produced in Japan, Canada and Mexico into the US ahead of them coming into effect. Honda has also adjusted production schedules, such as its plan to move Civic hybrid production to the US from Japan. – Copyright The Financial Times Limited 2025
