Nissan Eyes Chinese Supplier Practices to Slash Costs by $1.7 Billion

Nissan Motor is stepping up its global cost-cutting strategy by studying the efficiency of Chinese suppliers, aiming to reduce variable costs by 250 billion yen ($1.71 billion). The move is part of the Japanese automaker’s broader turnaround plan to save 500 billion yen by March 2027 through a combination of fixed and variable cost reductions.

Tatsuzo Tomita, Nissan’s chief of total delivered cost transformation, revealed that the company is learning from Chinese suppliers’ reliance on standardized parts and their close collaboration with design teams. These methods, Nissan believes, could improve competitiveness and streamline production for both current and future vehicles.

Rather than shrinking its supplier network, Nissan plans to strengthen partnerships, including with Chinese firms expanding internationally in Hungary, Morocco, and Turkey. Tomita noted that these suppliers could become key partners in Nissan’s global operations strategy.

The cost-cutting drive aligns with Nissan’s ongoing restructuring, which includes reducing around 20,000 jobs and consolidating seven plants worldwide. By achieving these measures, Nissan is targeting positive free cash flow and sustainable operating profits in its automotive business by fiscal year 2027.

Tomita acknowledged the ambitious nature of the 250 billion yen cost reduction goal but said it was achievable if the company maintains its current momentum. Much of that progress has come from sourcing thousands of efficiency ideas directly from employees.

The impact of these initiatives is expected to become more visible by late this year or early next year, depending on vehicle models. Nissan’s focus on cost efficiency through innovative supply chain practices underscores its push to stay competitive in an increasingly globalized and cost-sensitive automotive market.