Nissan Motor Co posted a big quarterly loss on Monday and warned it would lose money this year, marking its first fall into the red since Chief Executive Carlos Ghosn took the reins a decade ago.
Japan's No.3 automaker also said it would produce 20 per cent fewer vehicles in the year to the end of March than it had planned at the beginning of the year due to a global slump in car sales.
Last week, domestic rival Toyota Motor Corp tripled its annual operating loss forecast citing a faster-than-expected sales slump in the main US, Japanese and European markets. Honda Motor Co also cut its forecast last month, but expects to stay in the black.
For the year to March 31, Nissan now expects an operating loss - its first in 14 years - of JPY180 billion ($2 billion) instead of the JPY270 billion profit it projected three months ago. Consensus forecasts from 19 analysts had put the loss at JPY70 billion.
Nissan, 44 per cent owned by Renault SA, expects its net loss at JPY265 billion instead of a JPY160 billion profit.
Saddled with excess capacity and headcount with sales plummeting in developed markets, Nissan has cut 2,000 non-permanent manufacturing jobs in Japan, sought and got 1,200 voluntary early retirement applications in the US and temporarily laid off 3,300 workers at its Barcelona plant.
The spreading global recession has put consumers off of buying expensive goods and even if they wanted to purchase a car, financing has become difficult due to a dearth of credit.
Shares in Japanese automakers have slumped across the board in the last year but Nissan has fallen harder than Toyota and Honda, which have healthier balance sheets and liquidity positions.
Rising debt at Renault - in which Nissan holds 15 per cent - has also raised worries about any knock-on effects on the Japanese automaker.
Nissan's shares have dived more than 70 per cent in the last 12 months, while Toyota and Honda are down 47 per cent and 30 per cent. Nissan has shed $12 billion in market value since Ghosn arrived from Renault to rescue Nissan in 1999.
Sales in major markets started the year on a bleak note. Nissan's sales in the United States, its biggest market, fell 33 per cent in January, and by a similar rate in Japan.
For October-December, Nissan made an operating loss of JPY99.2 billion and a net loss of JPY83.2 billion. A year ago, it made an operating profit of JPY211.9 billion and net profit of JPY132.2 billion.
Third-quarter revenue fell by about a third to JPY1.8 trillion.
Nissan's shares are the worst performer in the domestic auto sector in the year to date, falling 13 per cent against a 7 per cent rise in Tokyo's transport sub-index. The stock ended down 5.8 per cent at JPY261 ahead of the results.