Nissan Sees Hope in £5.19 Billion UK Government Loan: What's the Plan To Curb Their Losses?

After multiple business-related moves that cost them billions of pounds in losses, Nissan is expected to receive a substantial loan from the UK government to recoup some of its losses and help it in its slow recovery. This loan is part of the automaker's plans to raise funds to keep the company's operations afloat, signalling a slow but constant journey for Nissan towards recovery.

Raising Funds for Restructuring Efforts

Nissan plans to raise over $7 billion (£5.19 billion) through debt issuance and asset sales as part of a significant restructuring effort. The funding strategy includes issuing up to ¥630 billion (£3.23 billion) in convertible securities and bonds, including high-yield US dollar and euro notes.

Additionally, the automaker is negotiating a £1 billion syndicated loan backed by UK Export Finance to support its Sunderland plant. Asset sales under consideration include partial divestitures in French automaker Renault, battery producer AESC Group, and manufacturing plants in South Africa and Mexico.

These measures come as Nissan faces ¥700 billion (£3.59 billion) in debt maturing by March 2026 and attempts to stabilise its finances under new CEO Ivan Espinosa.

More Cost-Cutting Measures

With its move to raise funds, Nissan has also initiated significant cost-cutting measures, offering voluntary buyouts to US employees and suspending merit-based pay raises globally.

According to a Reuters report, the buyouts target salaried staff in departments such as human resources, planning, IT, and finance, as well as workers at the Canton, Mississippi plant.

These actions are part of CEO Ivan Espinosa's restructuring plan, which includes closing seven production sites and eliminating approximately 20,000 jobs worldwide. Despite increased vehicle sales, Nissan's North American operating profit margins have declined, attributed to an ageing product lineup and a lack of hybrid models in the US market.

The company has also confirmed upcoming plant closures in Thailand and potential closures in Japan and Latin America. These measures aim to stabilise Nissan's finances amid underperformance in key markets.

Deteriorating Performance in North America

It is worth noting that Nissan's financial performance in North America has deteriorated sharply. Its operating profit margin plunging to -0.5% in the fiscal year ending March 2025, down from 4.6% the previous year, occurred despite a 5.7% increase in US vehicle sales, driven by strong demand for affordable models like the Versa and Kicks.

Analysts attribute the margin erosion to an ageing product lineup, lack of hybrid offerings, and aggressive discounting to clear inventory. Additionally, new US tariffs on imports from Mexico and Japan are expected to cost Nissan approximately $3.1 billion (£2.30 billion) this fiscal year, further pressuring profitability.

Other Restructuring Measures

Earlier this year, Nissan scrapped its plan to build a ¥150 billion ($1.1 billion) electric vehicle (EV) battery plant in Kitakyushu, Japan, marking another setback in its EV strategy. The facility was intended to manufacture lithium iron phosphate (LFP) batteries to support Nissan's next-generation affordable EVs.

This is not Nissan's first retreat from battery production. In 2018, it sold its majority stake in Automotive Energy Supply Corporation (AESC), a pioneering EV battery venture, to China's Envision Group. The divestment signalled a shift from vertical integration in a market where rivals like Tesla and BYD doubled down on battery technology.

Nissan's repeated restructuring attempts, including earlier cost-cutting and factory closures, have struggled to deliver long-term stability. The halted battery investment now raises concerns about its ability to stay competitive, especially in the fast-moving EV race.