Nissan To Cut North American Production By 20%
U.S. accounted for 28% of Nissan's worldwide sales of 5.77 million units for the year ended March 31
TOKYO May 29, 2018; The Nikkei Asian Review staff reported that Nissan Motor is slashing production as much as 20% in North America to cope with a U.S. automobile market where sales declined for the first time in eight years in 2017.
Cuts are already afoot at two assembly plants in the U.S. and three in Mexico. Workers will stay home an extra two or so days a week. Lines will slow to the point where output drops roughly 10% to 20% on the year by summer.
Employees will not be let go, and production lines will not be completely halted. But parts suppliers have been informed of the reductions, which are likely to temporarily impact their earnings. Nissan's cutbacks are expected to wrap up by autumn, when the redesigned Altima sedan launches.
The Japanese automaker previously focused on building up market share in the U.S., where demand steadily recovered since the 2008 global financial crisis. This approach included high-volume, low-margin sales to rental car companies, as well as generous sales incentives. Nissan's incentives apparently averaged at least $4,000 per vehicle in the previous term, above the industry average of $3,600.
The corporate sales and discounts boosted short-term turnover but would harm brand value and weigh on business in the long run. Starting this fiscal year, Nissan will reduce volume corporate sales along with incentives, shifting from a scale-based strategy to one focused on profits.
The Altima and the Rogue sport utility vehicle are among Nissan's best-selling models in the U.S. The company holds the sixth-largest share there, behind the likes of General Motors and Japanese peers Toyota Motor and Honda Motor.
The U.S. accounted for 28% of Nissan's worldwide sales of 5.77 million units for the year ended March 31. The production cuts are projected to deflate U.S. sales by 3% to 1.55 million this fiscal year.
Nissan produces most of its passenger vehicles for the U.S. market at five American and Mexican plants, with some imported from Japan and elsewhere. It also assembles Infiniti luxury vehicles in Mexico via a joint venture with Daimler.