Nissan Predicts Incredibly Lean Year, Plans Accordingly
Nissan’s all-important turnaround has been complicated immensely by the coronavirus pandemic. Supply chains fell into in shambles as countless factories temporarily closed as a countermeasure, harming profits as demand came to a screeching halt. Now there’s a looming recession that many economists fear may surpass the Great Depression — though this was a concern years before the COVID response hit the accelerator, thanks to growing debt and the way finance has been allowed to operate for decades.
Seeing the writing on the wall, many automakers have tamped down expectations for 2020. Being in the peculiar position of restructuring before the pandemic hit — which isn’t all that unique within the industry, truth be told — Nissan is reportedly plotting a 30 percent year-on-year cut in global production.
An anonymous insider told Reuters that the manufacturer intends to produce roughly 2.6 million vehicles between April and December of this year, versus the 3.7 million units it put together over the same time frame in 2019. While the last month or so has shown the industry recovering from the immense damage done this spring, most analysts expect things to begin backsliding again this fall. Nissan seems to be heeding that advice.
Nissan is planning for production to increase from 510,000 vehicles in the first quarter to around 930,000 in July-September, the people said. Second quarter output will be about 25 percent lower from a year ago, according to Reuters calculations.
Production is expected to increase to around 1.1 million vehicles in October-December, roughly 8 percent lower on the year.
In July-September, Nissan’s output will be hit hardest at home, falling around 47 percent from last year, after the automaker said it would cut more shifts at its Japanese assembly plants. Domestic output will recover slightly through December.
Meanwhile, the company still has to contend with a vast restructuring plan that aims to cut $2.78 billion in fixed costs and reduce global production capacities immensely through 2024. Its product portfolio won’t be spared, shrinking from 69 models to just fewer than 55 while moving away from fleet sales to help overall profitability.
The silver lining here is that Nissan leadership claims there’s enough cash on hand to endure the pandemic. But that proclamation came much earlier in the year, back when everyone assumed government lockdowns would be brief and business could return to normal by the start of summer. Nissan would still be bloated and in desperate need of streamlining, but the assumption was that the following months would be a little kinder.
“For Nissan to overcome this situation, we must admit our mistakes and correct course,” CEO Makoto Uchida said in May, adding that all staff (including executives) would need to make real sacrifices. “These steps need to be taken decisively and without compromise.”
[Image: Memory Stockphoto/Shutterstock]
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