Nissan Motor is reportedly preparing to implement job cuts at its Shonan plant in Kanagawa Prefecture, Japan. The move is linked to the decision to halt production of its "AD" commercial vehicle later this year, according to reports from Yomiuri Shimbun, as cited by MoneyDJ.

The layoffs could affect hundreds of employees, marking the first time Nissan has outlined specific workforce reduction measures in Japan. This announcement follows a broader global workforce reduction plan introduced in November 2024, which aimed to cut 9,000 positions worldwide.

Production at the Shonan facility, which has an annual capacity of 150,000 units, currently focuses on the AD and NV200 models. However, with sales of the AD vehicle declining due to increasing competition from rivals like Toyota, the company has decided to cease its production by November. Reports suggest Nissan is also evaluating potential production cuts for the NV200 model.

The job cuts come as Nissan works to navigate financial pressures and improve operational efficiency. The company has faced mounting challenges from a competitive automotive market, which has hindered profitability and forced the automaker to reassess its production priorities.

This restructuring occurs alongside significant developments in Nissan’s strategic direction, including ongoing merger talks with Honda. The two automakers announced a basic agreement in December 2024 to explore a potential merger aimed at boosting competitiveness and pooling resources.

Under the proposed timeline, Nissan and Honda plan to finalize merger agreements by mid-2025 and establish a joint holding company by August 2026. The new entity would oversee both brands as subsidiaries and would be listed on the Tokyo Stock Exchange Prime Market. If the merger proceeds as planned, Nissan and Honda would delist from the exchange upon the establishment of the holding company.

Despite the ambitious goals, the merger process faces significant obstacles. Reports indicate that Honda has requested Nissan to buy back shares held by Renault, Nissan’s French partner, to mitigate risks of third-party interference. This issue has gained urgency with reports that Taiwanese electronics giant Foxconn has shown interest in acquiring Renault’s stake in Nissan.

Such external factors have introduced additional uncertainty into the merger discussions, which are already complicated by Nissan’s ongoing financial challenges. Honda, with a higher market capitalization than Nissan, is expected to provide the majority of the capital for the joint holding company.