The Japanese automaker Nissan has recently made an unusual request to its suppliers, a move that may indicate deeper financial pressures than what is visible on the surface. According to four sources familiar with the matter, the company is seeking to delay its payment deadlines to suppliers in a bid to improve its working capital and free up cash essential for funding its strategic turnaround plan and massive investments in the transition to electric vehicles. This measure, while not unprecedented in the auto industry, raises critical questions about the company’s true financial state and presents complex challenges for its supply chain.

Details of the Request and its Immediate Implications

According to the report, Nissan has asked its suppliers to agree to a change in payment terms from a 60-day period (“net 60”) to a 90-day period (“net 90”). The request pertains to parts and components that will be supplied to the company between October 2025 and March 2026. In other words, Nissan is asking to hold onto its suppliers’ money for an additional month before making payment. The stated goal of this move is the optimization of working capital—a metric indicating a company’s financial liquidity and operational efficiency. By delaying payments, Nissan effectively receives additional, interest-free credit from its suppliers, thereby freeing up cash that can be directed toward investments or covering current expenses.

However, this action could have far-reaching consequences. For many suppliers, especially small and medium-sized enterprises, a stable and predictable cash flow is their business’s lifeblood. A one-month delay in receiving payments could push them into their own cash flow crisis, forcing them to take out expensive loans or, in extreme cases, even threatening their financial stability. This situation creates an inherent risk for Nissan itself; a supplier facing difficulties may struggle to meet deadlines or maintain production quality, thereby disrupting the automaker’s entire production line.

The Strategic Context: “The Arc” Plan and the Transition to EVs

Nissan’s request cannot be analyzed in isolation from its overall strategy. The company is in the midst of an ambitious turnaround plan named “The Arc,” which aims to stabilize the company, improve its profitability, and accelerate the shift to electric vehicles. As part of this plan, Nissan aims to achieve an operating profit margin of 6% by the end of the fiscal year ending in March 2027. This is a challenging target, considering that the forecast for the current year stands at less than 5%.

The investments required to realize this plan are enormous. The transition to electric vehicle production demands the development of new technologies, the conversion of manufacturing plants, the construction of a battery supply chain, and vast investments in research and development. These costs are placing a significant burden on the cash flow of all traditional automakers, and Nissan is no exception. The move to delay supplier payments is therefore seen as a tactical tool for managing these cost pressures, allowing the company to maintain financial flexibility during a critical period of structural change.

Contrasts and Questions: A Strong Balance Sheet vs. Cash Flow Pressure

One of the most interesting and concerning aspects of this story is the contrast between Nissan’s seemingly strong balance sheet and this latest move, which indicates cash flow pressure. As of the end of March 2025, Nissan’s cash and cash equivalents totaled 5.4 trillion yen (approximately $34 billion). On the face of it, these are impressive liquidity reserves that place the company in a solid financial position. Why, then, would a company with such a large cash reserve need to delay payments in amounts that might seem marginal relative to its balance sheet?

The answer likely lies not in the static amount of cash, but in the dynamics of its cash flow—the cash burn rate. The heavy investments in “The Arc” program and increasing competition in the automotive market, especially from Chinese manufacturers and its major rival Tesla, are creating constant pressure on the company’s coffers. It is possible that management anticipates particularly high expenditures in the coming months and prefers to build an additional safety cushion at the expense of its suppliers. This move, even if legal and somewhat common, signals a lack of financial confidence and indicates that despite the strong balance sheet, the rate of expenditure is a significant risk factor.

Conclusion and Forward Look: A Delicate Balance Between Company Needs and Market Stability

Nissan’s decision to request payment delays is a double-edged sword. On one hand, it is a legitimate tool for tactical financial management, designed to help the company navigate a period of massive investment and structural transformation. This move may provide it with the necessary cash flow flexibility to meet the ambitious goals of its turnaround plan. On the other hand, it exposes financial pressures and places considerable risk on its supply chain, the health of which is essential for Nissan’s own success.

Nissan’s future depends on its ability to find the delicate balance between its immediate financial needs and maintaining a healthy, stable relationship with its suppliers. The suppliers’ response to the request, and how Nissan manages the process with them, will be critical. Investors and analysts will be watching the company’s upcoming financial reports closely to see if the move indeed improved working capital, but more importantly, whether it was done without causing long-term damage to the trust and cooperation with its most vital partners on the road to an electric future.