Nissan to cut global production by 15%

TOKYO – Nikkei has learned that Nissan Motor would reduce its global production by about 15% for the fiscal year ending in March 2020, while the Japanese automaker moves away from the expansion campaign aggressive launched by the former president Carlos Ghosn.

The company aims to produce approximately 4.6 million units during fiscal year 2019 – the lowest figure in nine years – in accordance with the plans communicated to its suppliers. This decision should affect the results and could harm its alliance with the French manufacturer Renault.

Under Ghosn, Nissan has expanded to achieve ambitious sales targets. President and CEO Hiroto Saikawa announced last February a new strategy focused on profitability versus sales volume. He is committed to reviewing the production and sales structures of the company.

After a decade of growth, Nissan appears to have kept sales and production down during the 2018 fiscal year, due to weak performance in the United States. line with 2018, making the fall of Nissan stand out.

The projected reduction in production would be the strongest since fiscal year 2008, when production had dropped 16% due to the global financial crisis. By region, the automaker plans to maintain production in Japan at more than 900,000 units, while reducing it by 20% abroad, to reach about 3.7 million vehicles.

A significant impact on results could complicate Nissan's efforts to restructure its alliance with Renault. At present, the French manufacturer owns 43% of Nissan's capital, while the latter holds a 15% non-voting interest in Renault, while it accounts for nearly half of the net profit of his partner's group.

In North America, Nissan will reduce its business sales activities, which support unit sales but are less profitable. It will also reduce sales incentive funds distributed to retailers to fund rebates.

Nevertheless, "we have not been able to fully exploit the power of the brand to capture retail customers," Saikawa said. The volume of sales will probably suffer for a while.

At the same time, the economic downturn has weighed on new car sales in China, where the automaker generates about 20% of global sales. Nissan will focus on electric vehicles and other high value-added products, which will probably focus more on unit sales.

Nissan downgraded its earnings guidance for fiscal 2018 in February. It now expects a total operating profit of 450 billion yen ($ 4.02 billion), down 22% from the previous year and more than 40% over the three-year period. preceding.