Nissan Motor Co is undertaking an ambitious capital-raising initiative valued at over ¥1 trillion (approximately US$7 billion or RM29 billion), as it confronts a looming debt maturity crisis and accelerates a sweeping restructuring programme. Internal documents reviewed by Bloomberg reveal the automaker’s strategy encompasses a hybrid approach—issuing convertible securities, initiating asset divestitures, and securing sovereign-backed syndicated financing.
The Yokohama-based manufacturer plans to issue up to ¥630 billion in convertible bonds and high-yield notes denominated in US dollars and euros. A significant tranche of the financing effort includes a £1 billion (US$1.4 billion) syndicated loan facility underwritten by UK Export Finance (UKEF)—a critical endorsement signalling confidence from the British government in Nissan’s strategic footprint within the UK’s post-Brexit automotive landscape.
Nissan is also eyeing the disposal of non-core assets to bolster liquidity. This includes partial divestments in long-held equity positions in French partner Renault SA and Japanese battery maker AESC Group Ltd, alongside manufacturing plants in South Africa and Mexico. In Japan and the US, key real estate—most notably its Yokohama headquarters—are being considered for sale-and-leaseback transactions.
Market response has been swift, with Nissan’s shares rallying up to 4.6% in Tokyo, reflecting investor optimism despite the underlying financial distress.
Financial Stress and Leadership Response
These fundraising efforts come as Nissan grapples with acute financial headwinds. Internal forecasts indicate the company’s automotive division could see cash reserves dwindle to near zero by March 2026, should US tariffs persist and no additional liquidity be injected. The fiscal pressure is compounded by US$5.6 billion in debt maturing next year—Nissan’s largest obligation since at least 1996.
CEO Ivan Espinosa, who assumed leadership earlier this year, has acknowledged the urgent need to re-establish fiscal sustainability. While asserting that the group maintains a liquidity buffer of approximately ¥2.2 trillion, Espinosa is pursuing aggressive restructuring to avert further deterioration. This includes a drastic reduction of 20,000 jobs and the shuttering of seven out of 17 global plants by 2028, with two major closures in Japan’s Oppama and Hiratsuka regions already in motion.
Should prevailing tariffs remain, the automaker could incur an operating loss of up to ¥450 billion for FY2025—its largest operational deficit on record. Even in a best-case scenario without tariffs, the projected loss stands at ¥300 billion, underscoring systemic inefficiencies and a pressing need for transformation.
UK Strategic Investments and Export Leverage
Central to Nissan’s recovery blueprint is its UK manufacturing hub in Sunderland, the country’s largest automotive production facility. The carmaker has pledged £2 billion to scale electric vehicle production at the site. The UKEF-backed loan, therefore, not only provides liquidity but also safeguards British employment and supports decarbonisation objectives aligned with national policy.
AESC, once a Nissan subsidiary and now under Chinese majority ownership, has committed to constructing a second battery plant in Sunderland. This move aligns with UK government priorities to secure local EV supply chains amid intensifying geopolitical tensions and trade barriers.
Recent developments, including the UK-US trade agreement, could offer Nissan critical relief if exports from Sunderland are exempted from US tariffs. This is particularly salient given the Trump administration’s 25% import tax on foreign-made vehicles—effective since April—and its disproportionate impact on export-heavy manufacturers like Nissan.
Credit Ratings and Liquidity Position
Despite the proposed funding initiatives, Nissan’s financial credibility remains under scrutiny. Credit rating agencies have downgraded the company’s status to junk territory amid persistent negative cash flow and uncertain profit outlooks. Although the company reports ¥2.1 trillion in untapped credit facilities, its capacity to withstand prolonged macroeconomic shocks is tenuous without material operational improvement.
The success of Nissan’s funding strategy, much of which is still pending board approval, will be pivotal in determining whether the automaker can navigate its current inflection point. Industry analysts will be closely monitoring the company’s execution of asset disposals, cost rationalisation measures, and progress on strategic alliances—especially following the collapse of merger talks with Honda Motor Co earlier this year.
In the broader context, Nissan’s situation reflects the existential challenges facing legacy automakers amid the global shift to electrification, trade realignment, and evolving capital markets. The next 12 months will be critical—not only for Nissan’s survival but also for Japan’s automotive sector, which remains a bellwether for industrial resilience in a volatile global economy.–BLOOMBERG
