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Nissan, which recently reported its largest loss in over a decade, will reduce production and close plants.
As the auto industry struggles to adjust to a new reality as a result of the ongoing coronavirus pandemic, production plant closures, workforce reductions, and lower model numbers are a hint of things to come.
Yesterday, CEO Makoto Uchida of Nissan revealed that the company has suffered its largest net loss in over ten years, totaling $6.2 billion, at its Yokohama headquarters. He pointed out that Nissan’s Sunderland facility in the UK will remain open while its Barcelona plant in Spain and another in Indonesia would close to optimize its global manufacturing. About 3,000 people are employed by the Spanish firm and its supply chain network, but one labor organization estimated that up to 22,000 jobs could be indirectly impacted by the closure. Numerous Spanish employees gathered outside the plant after hearing the announcement and protested by setting tires on fire.
Nissan is a member of a trilateral alliance with Mitsubishi and Renault that is reforming its global operations to share technology and platforms and reduce costs. After highlighting Nissan’s sustained production at its UK facility, Uchida added that the company would concentrate on a number of “important markets,” including China, Japan, and North America. Surprisingly, though, he omitted to mention Europe. China is currently the focus of attention due to the fact that it was the first of the three key markets to have good growth as it adapted to the pandemic. Nissan reports that its sales volume in China increased by 1.1 percent to 122,846 vehicles in April. The company anticipates that this number will rise as additional models enter the market.
Uchida revealed a 4-year recovery strategy to cut expenses, reduce capacity, and slash the number of vehicle models during the event. Model numbers will be cut from 69 to under 55 as part of the downsizing initiative, and production will concentrate more on electric vehicles, such as the four-wheel-drive Ariya SUV, which is scheduled for a summer introduction. Uchida also stated that in order to achieve sustainable development and profitability by 2023, manufacturing would be reduced by 20% to around 5.4 million vehicles annually.
The extensive restructuring is a part of Nissan, Renault, and Mitsubishi’s effort to concentrate on costs and profitability in the wake of the sharp decline in automobile demand brought on by the coronavirus pandemic. The automaker’s operating profit had been declining before to the pandemic for four years in a row as it sought to gain market share, notably in America. This led to plant overcapacity and forced dealers to give significant discounts. The company’s dismal sales performance was only made worse by the arrest of former chairman Carlos Ghosn in November 2018. Ghosn had advocated for volume expansion and a partnership with the FCA Group.