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Nissan To Cut Its Output in Japan By 78% Next Month


04/28/2020


Nissan To Cut Its Output in Japan By 78% Next Month
The hit of the novel coronavirus pandemic crisis has forced the Japanese car maker Nissan Motor Co Ltd to cut down its production of cars in Japan by 78 per cent in May compared to what it had manufactured in the same month a year ago. The company was already facing severe troubles with demand and sale even before the pandemic hit.
 
The severe and prolonged lockdowns and travel restrictions imposed in various countries to prevent the spread of the coronavirus pandemic has severely hit auto demand across the globe causing great issues for global automakers. Nissan has been particularly hard hit because its profitability had been falling even before the pandemic following the turmoil in the company and its relations with its French alliance partner Renault even since the ousting of the Japanese company’s former Chairman Carlos Ghosn.
 
According to reports, Nissan has plans to manufacture only about 13,400 vehicles in May while it had manufactured almost 61,000 vehicles in the same month a year ago. \
 
One of the factories that will be hit most due to the planned production cuts is Nissan's plant in Kyushu, southern Japan, where just a single shift will be operated by the company for most of the current month as well as for the entire of next month. This is because of a drop in demand for the Rogue Sport SUV crossover model, claimed reports citing internal documents of the company.
 
That will result in a drop in output of 70 per cent compared to the initial plans to manufacture about 44,800 units of the SUV.
 
The company plans to churn out a total of 33,700 vehicles in June domestically in Japan compared to the approximately 63,700 vehicles that it had manufactured last year in the same period. Compared to a previous plan of producing around 59,300 vehicles, this number is 43 per cent lower.
 
No official comments from Nissan were available on the issue.
 
Since early April, production at its plant in Tochigi, north of Tokyo, has been stopped by the automaker. The company plans to continue with the production halt through May.  Since the beginning of this month, there have also been periodic stoppages at Nissan's Oppama plant in Kanagawa Prefecture.
 
Following two year when the car company was troubled by falling sales, deteriorating margins and depleting cash reserves, Nissan was forced to restructure and the coronavirus pandemic crisis has not made the restructuring an urgent issue.
 
The management of the company has confirmed the necessity of the company to be much smaller and the latest recovery plan that is to be announced next month is likely to see a reduction in production and sale target by about 1 million cars annually, according to previous reports published earlier this month quoting senior company officials.
 
Nissan’s Japanese alliance partner Mitsubishi Motors Corp is also facing issues of reduced demand for its vehicles and is currently also planning to reduce its domestic production by almost one third, during the next two months.
 
(Source:www.nasdaq.com)