Can Re:Nissan’s cost reductions drive the automotive business into the black?

Under Re:Nissan, Nissan has set a target of reducing fixed costs by ¥250.0 billion and variable costs by ¥250.0 billion, for a total reduction of ¥500.0 billion by FY2026, with the aim of returning the automotive business to positive operating profit and free cash flow. In its FY2025 disclosure, Nissan reported fixed-cost reductions of approximately ¥200.0 billion and variable-cost reductions of approximately ¥55.0 billion, bringing the total to ¥255.0 billion. On a simple calculation, ¥245.0 billion remains to be achieved against the ¥500.0 billion target.

Consolidated operating profit was ¥77.889 billion in Q1 FY2027, but the automotive business segment posted an operating loss of ¥17.796 billion. Although this was an improvement of ¥154.295 billion from the ¥172.091 billion operating loss in the same quarter of the previous year, the improvement from cost reductions has not yet brought the automotive business into standalone profitability. It is therefore too early to conclude that Re:Nissan’s earnings-structure reform is complete based solely on the return of consolidated operating profit to the black. The automotive business’s profit or loss must be reviewed separately.

The full-year consolidated operating profit forecast is ¥200.0 billion, which implies a progress rate of 38.9% based solely on the Q1 result. However, Re:Nissan’s target is not consolidated profit, but positive operating profit and free cash flow in the automotive business. At the next earnings release, investors will need to review together the reductions achieved in FY2026 in addition to the ¥255.0 billion achieved through FY2025, the breakdown between fixed and variable costs, the one-off or recurring nature of the savings, and the automotive business’s H1 operating profit or loss.