Nissan isn’t in a good spot. The company tried and failed to merge with Honda a while back, and the automaker’s financials only appear to have worsened since. According to a Reuters report, the marque’s finances are so bad, it has asked some suppliers to allow it to free up short-term cash by delaying payments. In other words, Nissan is behind on the rent. The automaker has brought in a new CEO — Ivan Espinosa — to help stop the bleeding while it assesses the situation and evaluates the best path forward. Meanwhile, the company continues to roll out new models and trims, like the recently-unveiled Armada Nismo and its updated Leaf, which will be critical to the company’s survival.
Nissan Is Behind On The Rent
Internal documents and several emails were viewed by the outlet, which show the automaker is asking for deferred payments to suppliers. Nissan faces slow sales and a lineup that’s aging rapidly in the face of competitors. The brand reported a huge $4.5 billion net loss in the financial year that ended in March. Nissan also hasn’t elected to give an earnings forecast this year for pretty apparent reasons.
Allegedly, this isn’t the first time, with a Nissan employee saying that suppliers in the UK and EU were asked to postpone payments “again” with the intention of bolstering cash reserves.
In some circumstances, automakers may ask suppliers for extensions as Nissan has, something that would allow it to have more cash going into the end of this year’s first quarter, and thus, padding the blow a little when those results do come. Nissan told Reuters that suppliers could “choose to be paid immediately or opt for a later payment with interest.”
This May Not Be The First Time
Allegedly, this isn’t the first time, with a Nissan employee saying that suppliers in the UK and EU were asked to postpone payments “again” with the intention of bolstering cash reserves. Reportedly, the orders were “requested from CEO top down.” Some payments have been delayed already, in some cases until September. However, these are only requests, according to the employee, who said that suppliers weren’t forced to accept delayed payments.
TopSpeed’s Take
Nissan and Honda’s merger talks aren’t totally through, but the longer this drags on, the more it appears that Honda is benefiting from staying away from Nissan. The company needs cash badly, as evidenced by its delayed payments. The automaker has a lot of work to do to turn things around, if it isn’t too late already. The refreshed Armada and Leaf are a step in the right direction, but it may be too little, too late.
Source: Reuters
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