TOKYO ― Nissan cut planned production by a third at its top Japanese plant this month, a move that will also see it slash output of a flagship crossover model, two people said, as it struggles with weak US demand for its aging lineup.
The Japanese automaker on Thursday reported an almost complete wipe-out in April to June profit and cut its full-year outlook after it was forced to offer deep discounts in the United States, highlighting the deepening risk it faces in its largest market.
Unlike rivals Toyota and Honda, Nissan does not offer hybrid models in the US and therefore has not benefited from recent upswing in demand from US consumers for hybrids as enthusiasm around electric vehicles (EVs) has cooled.
The carmaker now plans to produce just under 25,000 vehicles at its Kyushu plant in southwest Japan this month, according to two people with knowledge of the situation. Both declined to be identified because the information is not public.
Nissan was not immediately able to comment, a spokesman said.
The company expects to make around 10,000 of the Rogue crossover for export at the plant, half of what it had previously planned to make this month of the popular car, the sources said.
In addition to Kyushu, Nissan also makes Rogue models in Smyrna, Tennessee.
Line workers in Kyushu were now working fewer than the usual eight hours a day due to the scaled-back production, and were clocking a little more than seven hours a day, one of the people said.
Nissan had been left with a buildup of 2023 models of the Rogue in the US, and those were getting harder to sell with the rollout of the 2024 model, a second person said.
It had to offer aggressive incentives to clear out the 2023 model, while holding back on aggressive promotion of the higher-margin 2024, the person said.
Nissan said in March it would launch 30 new models over the next three years and aimed to raise its global sales by 1 million vehicles while cutting costs to improve profitability.
In 2023, it sold around 3.4 million vehicles globally, up 5 percent from a year earlier.
The target may now be a stretch, said Seiji Sugiura, an analyst at Tokai Tokyo Intelligence Laboratory.
“Even if Nissan tries to sell luxury or expensive cars, it doesn’t have that kind of brand power in the United States. You can see that when you look at the prices of used cars,” he said.
“They have to give discounts, they have to sell with incentives.”
Although Nissan sells two EVs in the US, it has been caught out by not offering hybrids in that market, betting instead that US consumers would be interested in gasoline-powered cars or EVs. That is likely to continue to weigh.
“The overall US market is seeing a shift in demand toward hybrids,” analysts at Goldman Sachs wrote in a note to clients, adding Nissan’s hybrid launch wasn’t expected in the US until 2026.
Nissan has said that of its 30 planned new models, 16 would be electrified, including eight EVs and four plug-in hybrids.
Chief Executive Officer Makoto Uchida told a briefing on Thursday the company would look to strengthen its lineup in North America, including with plug-in hybrids, but declined to give specific timing.
It will be “some time” before the stock market factors in the company’s envisioned margin expansion based on new models, Goldman Sachs said.
Globally, Nissan’s inventory now stands at 640,000 vehicles, the highest level in more than four years. The state of its US business marks another complication for an automaker that is already dealing with years of shrinking market share in China.
Be the first to comment