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.
Will Nissan cease operations?
Nine years after the firm began the Datsun brand’s global relaunch in India, rumors were rampant when the company decided to end the Datsun brand there.
Nissan India has not been shut down, despite rumors to the contrary, according to a senior corporate official who also confirmed that the company is heavily invested in India. Nine years after the firm began the Datsun brand’s global relaunch in India, rumors were rampant when the company decided to end the Datsun brand there.
Srivastava emphasized that the business has a significant investment in India “The first vehicle to be introduced in India under Nissan NEXT, the company’s global transformation plan, is the Magnite, which offers highly aspirational value. With 50,000 production rollouts, it surpassed the milestone of one lakh plus client bookings in March 2022.”
He emphasized that there are presently more than 18,000 pending client bookings for its well-liked small SUV, with a waiting time of 5 to 6 months.
Despite Magnite’s respectable demand, it is well known that the corporation is in danger in India. In India, it has had a miserable almost two-decade-long journey, both in terms of market share and footprint expansion. Nissan India, which only has one production facility in Chennai, now has a market share of less than 1%.
With aggressive efforts to maximize output in the face of obstacles from semiconductor shortages and Covid-19, Srivastava added, “We are servicing the client demand in the local and 15 export markets through our manufacturing unit in Chennai.
When senior Congress leaders asserted that Nissan themselves had ceased operations in the Indian market, the discontinuance of Datsun became a political issue. Mallikarjun Kharge, a former minister of the Union and the opposition leader in the Rajya Sabha, tweeted on Monday that Nissan has joined “Ford, General Motors, Fiat, United Motors, Premier Automobiles, and Harley Davidson” in ceasing operations in India.
“Due to “sleaze of business” and declining revenues, several automobile majors have left India one after another. No one has ever failed the Indian economy and brought shame on India abroad like the BJP, “Added he.
How long will Nissan be closed?
DEARBORN, MI — Nissan claims that due to a scarcity of computer chips brought on by a coronavirus outbreak in Malaysia, its enormous facility in Smyrna, Tennessee, would be closed for two weeks beginning on Monday.
Nissan Philippines is it closing down?
Reuters, January 21 – The commerce minister of the nation in Southeast Asia said on Thursday that Japanese automaker Nissan Motor will cease operations in the Philippines.
What caused the Nissan plant to close?
Nissan’s U.S. manufacturing is still being impacted by a COVID-19 outbreak that occurred at a Malaysian microchip supplier plant this month.
Nissan’s Smyrna, Tennessee, facility was already closed due to the Malaysian crisis as of August 30. However, that delay will now last until September 12, which will have an impact on the manufacturing of important models including the Nissan Rogue, Pathfinder, and Infiniti QX60 SUVs.
Additionally, the Versa, Kicks, and Sentra models will not be produced in Nissan’s Aguascalientes, Mexico, facility until September 5.
Nissan is anticipated to lose 157,000 units of North American manufacturing this year, including the recently reported downtime, according to AutoForecast Solutions (AFS).
Nissan announced on August 10 that Smyrna activities would be suspended for two weeks due to the issue at the chip supplier. The provider has not been named by Nissan.
Due to a deficit in microchip allocations, Nissan has seen some manufacturing line interruptions this year, just like other automakers. However, those shortages were primarily brought on by chipmakers with constrained capacity and automakers with hazy 2021 predictions miscalculating demand.
According to AFS estimates, the chip shortfall has caused automakers to scale back their global production plans by 6.9 million vehicles.
Many in the sector continued to believe that the chip problem was progressively abating as the COVID-19 epidemic subsided and supply networks resumed operations.
However, the car sector is facing new issues due to a resurgence of COVID-19 infections, especially the transmission of the virus’ delta form.
What led to Nissan Smyrna’s closure?
Due to a coronavirus outbreak in Malaysia and an interruption in the supply of semiconductors, one of the biggest auto manufacturers in North America was forced to temporarily close.
Is there a lack of Nissan automobiles?
According to Edmunds, the typical new-vehicle loan payment in the first quarter of 2022 was $648.
The Nissan Group’s U.S. sales and brand confidence increased last year as a result of a revamped product lineup.
However, a wave of supply shortages across the entire industry currently poses a threat to topple the momentum.
Nissan Group began 2022 in the red despite an 8.7% increase in sales from the previous year. Deliveries in the first quarter fell by 30% to 201,081.
Nissan division sold 189,835 automobiles from January to March, a 29 percent decrease from the same period last year. 11,246 automobiles represented a 41% decrease in Infiniti volume. It was the third consecutive quarterly decline for the corporation.
In the United States, Nissan Division Vice President of Sales and Regional Operations Judy Wheeler stated that it all came down to production and what was actually available to sell.
According to research from AutoForecast Solutions, Nissan lost 228,000 units of manufacturing in North America in 2021 as a result of the chip shortage.
The supply of auto parts has been hampered this year by the earthquake in Japan and COVID-related lockdowns in China.
Wheeler predicted that production would continue to improve but that it wouldn’t return to normal until 2023. It will take more time than we initially anticipated.
However, as fuel prices in the United States rise, Nissan’s seemingly unusual gamble on sedans is delivering the company an unexpected boost.
When it comes to the situation with rising fuel prices, Wheeler remarked, “We’re in a wonderful position.”
Nissan has one vehicle that gets more than 40 mpg and six vehicles that get more than 30 mpg.
Customers will select automobiles with significantly higher fuel efficiency as Q2 and Q3 approach — and I believe it will persist that long, according to Wheeler. “That’s going to be more important than ever in the [customer’s] decision-making.”
Indeed. Sedans made up two of the three Nissan models that had a rise in sales in the previous quarter.
Sales of the all-electric Leaf hatchback increased by 49%. The midsize Altima sedan saw a 20% increase in sales.
Nissan is giving sedans priority in its limited chip supply to take advantage of the resurgence in demand for energy-efficient vehicles.
We might not have placed as much emphasis on fuel-efficient vehicles six months ago, according to Wheeler. We’re saying, “Hey, we can actually put more of those in production and perhaps do a little less of something else,” in light of current market conditions.
The Nissan Titan fell by 14%, the Kicks fell by 16%, the Altima rose by 20%, the Rogue fell by 48%, the Infiniti QX50 fell by 46%, and the Infiniti Q50 fell by 44%.
According to TrueCar, the average transaction price increased by 15% from a year ago to $33,223 for the quarter.
Did you realize? Sales of the Nissan Frontier more than doubled to 22,405 in the first three months.
Nissan is it reducing output?
The Nikkei reported without citing its source that the Japanese automaker has informed suppliers that it will assemble 583,000 automobiles over the course of the two months.
Nissan is reducing its anticipated global output for October and November by 30% as a result of the COVID-19 pandemic-related scarcity of semiconductors, according to the Nikkei business newspaper.
Nissan’s spokesman said, “We understand that the semiconductor supply deficit is still in a tough condition,” but she would not comment on the alleged drop. Next month, when the business releases its most recent profit reports, it will provide an update.
Despite a pick-up in demand in significant auto markets like China and the United States, Nissan has been obliged to reduce production along with other automakers. The epidemic has simultaneously reduced component producers’ output and spurred consumer demand for electronics, which has increased chip competition.
The largest automaker in the world, Toyota Motor Corp, indicated this month that it would lower production by 15% in November after reducing output in September and October as a result of a slowdown at component plants in Malaysia and Vietnam.
How are Nissan’s chip shortages going?
Uchida stated during the earnings briefing that although the Japanese automaker supports alliance member Renault’s (RENA.PA) decision to separate its electric vehicle (EV) division, more discussion is required to see whether such a decision would benefit their relationship.
In an effort to catch up to competitors like Tesla (TSLA.O) and Volkswagen (VOWG p.DE), the French automaker stated in April that all alternatives, including a potential public listing, were on the table for the separation of its EV business. View More
However, the action has sparked rumors that Renault would think about decreasing its Nissan investment. View More
The structure of their cooperation, which involves Renault owning 43.4% of Nissan and giving Nissan a 15% non-voting stake in the French corporation, has long caused resentment in Japan.
The two-decade-old alliance between the automakers, which also includes Mitsubishi Motors (7211.T), was upended in 2018 when alliance founder Carlos Ghosn was fired amid a financial scandal. Since then, they have vowed to pool more funds and collaborate more closely to produce electric vehicles. View More
Nissan turned a 19 billion yen deficit in the fourth quarter of 2017 into an operating profit of 56 billion yen in the most recent quarter, supported by cost-cutting measures and a weaker currency.
The outcome exceeded the 38.3 billion yen profit expected on average from the eight analysts surveyed by Refinitiv.
Nissan previously claimed that the global shortage of semiconductors was to blame for its global production declining for a fourth straight fiscal year, with the most recent decrease being an 11% year-over-year decrease.
Prior to the report, Nissan’s shares closed up 1%, outperforming a 1.8% decline in the overall market (.N225).
Satoshi Sugiyama reported; Kevin Krolicki and David Dolan contributed additional coverage. Editing by Barbara Lewis, Mark Potter, Jane Merriman, and Christopher Cushing