Nissan (7201.T) cut planned production at its main Japanese factory by a third this month, a move that will also see it drastically cut production of a flagship intersection model, two sources said, as it struggles with weak U.S. demand for its outdated lineup.
Nissan’s stock price fell 3% on Friday.
The Japanese automaker on Thursday reported a near-total drop in profit for the months of April through June and cut its full-year forecast after it was forced to make deep cuts in the U.S., underscoring the growing risk the company faces in its biggest market.
Unlike rivals Toyota And HondaNissan does not offer hybrid models in the U.S. and therefore has not benefited from the recent uptick in U.S. consumer demand for hybrids as enthusiasm for electric cars has waned.
The automaker now plans to produce just under 25,000 vehicles at its plant in Kyushu in the southwestern 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 unable to comment, a spokesperson said.
The company expects to produce about 10,000 units of the Rogue crossover for export at the plant, half of what it had planned to produce of the popular car earlier this month, the sources said.
In addition to Kyushu, Nissan also produces Rogue models in Smyrna, Tennessee.
According to one of the sources, workers in Kyushu were now working less than the usual eight hours a day due to the reduced production. They were now working just over seven hours a day.
According to a second source, Nissan still had stock of 2023 Rogue models in the U.S., and they were becoming increasingly difficult to sell with the arrival of the 2024 model.
According to the source, the company had to offer aggressive incentives to clear the 2023 model, while holding off on aggressively promoting the higher-margin 2024 model.
Hybrid problems
Nissan announced in March that it would launch 30 new models over the next three years and that it aimed to increase global sales by 1 million vehicles while cutting costs to improve profitability.
Approximately 3.4 million vehicles were sold worldwide in 2023, an increase of 5% compared to a year earlier.
According to Seiji Sugiura, an analyst at the Tokai Tokyo Intelligence Laboratory, the target may now be too far-fetched.
“Even if Nissan tries to sell luxury or expensive cars, it doesn’t have that kind of brand power in the United States. You see that when you look at the prices of second-hand cars“, he said. “They have to give discounts, they have to sell with incentives.”
While Nissan sells two EVs in the U.S., the company has been caught out by not offering hybrids in that market. Instead, it’s betting that American consumers will be interested in gas-powered cars or EVs. That will likely still be a deciding factor.
“The U.S. market as a whole is seeing a shift in demand toward hybrids,” Goldman Sachs analysts wrote in a note to clients, adding that Nissan’s hybrid launch in the U.S. is not expected until 2026.
Nissan has said that of the 30 new models it plans to launch, 16 will be electrified, including eight electric vehicles and four plug-in hybrids.
CEO Makoto Uchida said at a press conference Thursday that the company is looking to bolster its offering in North America, including with plug-in hybrids, but he declined to provide specific timing.
It will take some time before the scholarship According to Goldman Sachs, factors are playing a role in the company’s targeted margin expansion based on new models.
Nissan’s global inventory now stands at 640,000 vehicles, the highest level in more than four years. The state of the U.S. business marks another complication for an automaker that has been struggling for years with a shrinking market share in China.
The US and China are Nissan’s two biggest markets. The rise of powerful new players in China, such as BYD, could mean the Japanese automaker becomes even more dependent on the US, as the outlook in China continues to dim.