Michigan — Nissan has said that due to a shortage of computer chips brought on by a coronavirus outbreak in Malaysia, its sizable facility in Smyrna, Tennessee, would be closed for two weeks starting on Monday.
Since the semiconductor shortage, which has hampered vehicle manufacturing globally, began to take hold in the latter part of last year, the stoppage is among the longest at any American auto plant of this scale.
In response to a COVID-19 outbreak at a Malaysian chip manufacturer, Nissan said on Tuesday that it was out of chips. On August 30, it anticipates resuming manufacturing.
Six Nissan models are produced in the 6 million-square-foot Tennessee factory, which also employs 6,700 people and is home to the company’s best-selling vehicle in the United States, the Rogue small SUV.
According to analysts, the massive Nissan factory’s two-week stoppage is an indication that the semiconductor scarcity could not be ending as soon as many auto executives had planned for late this year.
The few American facilities that have been closed for two consecutive weeks are typically those that produce sedans or other lower-volume, less lucrative vehicles. Automakers have made an effort to save chips for the factories that produce their best-selling vehicles, primarily SUVs and pickup trucks. However, there have also been periodic closures of pickup vehicle manufacturing facilities, including three General Motors factories this week.
Sam Abuelsamid, principal analyst at Guidehouse Research, stated that Smyrna is a vital manufacturing for Nissan and that its closure indicates that there may not be a quick resolution to the semiconductor shortage.
Supply issues could endure even longer than that, according to Abuelsamid, as COVID-19 infections continue to spread throughout the semiconductor supply chain in Asia and other places.
There is a nationwide shortage of new vehicles as a result of the shortfall, manufacturing closures, and high consumer demand in the U.S. As a result, prices have increased and the used car market has been affected by the lack.
According to Phil Amsrud, senior principal analyst for IHS Markit who monitors the chip business, the chip scarcity is beginning to ease, but the coronavirus delta variant is beginning to cause issues at companies in the semiconductor supply chain, which is aggravating the situation.
Large silicon wafers are divided into numerous smaller integrated circuits by chip foundries in Taiwan and other Asian countries. After that, they are transported to Malaysian “back end” producers where they are subsequently sliced into chips for use in vehicle control computers.
However, as demonstrated by the Nissan stoppage, breakouts among workers in those industries and in the shipping industry are once again hurting supplies. Additionally, he added, the chips automakers are purchasing now could not be suitable for future products.
Amsrud also pointed out that poor immunization rates are common in many nations that handle the back-end jobs, such as Malaysia.
I think we’re basically setting up for Delta to have a footing in all of these places, he said. “I believe delta will continue to give us several issues.”
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Snapshot
Nissan’s Tennessee assembly plant in the United States has been forced to temporarily suspend operations because to a Covid-19 outbreak at a semi-conductor chip manufacturing in Malaysia.
The plant will shut down vehicle production from August 16 to August 29 inclusive, with a planned restart on August 30, according to the brand’s US branch, Automotive News.
The Nissan Maxima, Pathfinder, Leaf, Rogue, Murano, and Infiniti QX60 are all made at the Smyrna, Tennessee plant, which employs about 6700 people.
The Smyrna plant makes some of the Nissan Pathfinder models, albeit they are still primarily reserved for the North American market.
The shutdown won’t have any effect on the local Nissan lineup, though, as the huge SUV is presently on hold while the company waits for the introduction of a new generation model perhaps in 2022.
Nissan will make additional adjustments to its North American manufacturing schedules in August as a result of a Malaysian supplier ceasing operations owing to an increase in new Covid-19 cases, according to a US representative for the automaker.
“The weeks of August 16 and August 23 will see all production lines at our Smyrna, Tennessee, factory shut down; production is anticipated to start up again the following week, August 30. To examine the effects of supply chain difficulties and lessen [sic] disruption for car deliveries to our dealers and consumers, we continue to collaborate closely with our supplier partners.”
The announcement exacerbates the severe shortages of semiconductor chips that the automobile sector is already experiencing; this problem is anticipated to last through the end of the year and into the new year.
General Motors recently announced it would temporarily halt production at three of its full-size pick-up truck production sites in North America as a result of the semi-conductor chip shortage.
Due to a shortage of chips, Nissan’s plant will be closed for two weeks.
According to the Associated Press, Nissan will shut down its Smyrna production for two weeks starting on Monday owing to a shortage of computer chips.
According to AP, the stoppage is one of the longest at any large-scale U.S. auto facility since the semiconductor shortage began to affect late last year and is being caused by computer chip shortages brought on by a coronavirus outbreak in Malaysia.
“Nissan will make additional adjustments to its North American manufacturing schedules in August as a result of a Malaysian supplier ceasing operations as a result of an increase in COVID-19 instances. The weeks of August 16 and August 23 will see all production lines at our Smyrna, Tennessee, facility shut down; production is anticipated to start up again the following week, August 30. To assess the effect of supply chain issues and reduce disruption for car deliveries to our dealers and customers, we continue to closely collaborate with our supplier partners “In a statement, Nissan added.
Currently being produced at the Nissan plant in Smyrna, Tennessee, are the Nissan Murano, Nissan Maxima, Nissan LEAF, Nissan Pathfinder, Nissan Rogue, and Infiniti QX60.
Monday will see Nissan’s return to US manufacture.
TOKYO — Three weeks after Japanese rivals Toyota Motor and Honda Motor resumed North American production, Nissan Motor will start up operations at its U.S. plants on Monday.
According to Nissan’s reopening plan, a vehicle assembly facility in Canton, Mississippi, will start up again on Monday, and one in Smyrna, Tennessee, will follow on June 8. In Decherd, Tennessee, a limited manufacture of Infiniti powertrains started on May 1.
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.
Nissan facility to close?
In anticipation of future product launches, Nissan said it will “halt activities at the Decherd powertrain factory.” 400 of its staff will be transferred. Although Infiniti Powertrain was designed to produce up to 250,000 engines annually, at its peak output in 2020, it was only able to operate at 35 percent of capacity.
Why is there a lack of Nissans?
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.
How long will Nissan be closed?
Due to a chip shortage, the Nissan facility will be closed for two weeks. 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.
Has vehicle manufacturing returned to normal?
The global microprocessor shortage was the initial cause of the new-car inventory problems, but cascading supply chain problems have kept prices elevated. Tyres, paint resin, wiring harnesses, and seats are among the parts and components that are delayed in getting to manufacturing plants, according to Tyson Jominy, vice president of data and analytics at J.D. Power.
Due to these continued difficulties, output won’t likely resume at its previous level until 2023, and stockpile levels might not increase until the second half of 2023. Significant cash incentives probably won’t return until inventory levels are raised, and in the interim, new-car prices might keep rising.
There are still a number of incentives available, but Jominy speculated that automakers might be utilizing them in various ways. “Some incentives will persuade customers to use the captive lender owned by the automaker, but none of them are significant ‘cash-on-the-hood’ levers. Such incentives are unlikely to surface again until the second half of 2023, when inventory levels are anticipated to surpass the 2 million mark. Even yet, we do not anticipate receiving a return of exceptionally big financial sums.”