Business / Corporate

Nissan to slash May car production by 78% vs. last year

REUTERS

Nissan Motor Co. plans to cut the number of cars it produces in May in Japan by 78 percent from last year as the impact of the coronavirus pandemic shakes the troubled automaker already struggling with falling sales.

As automakers around the world reel from plunging sales amid lockdowns imposed in many countries to curb the spread of the virus, the hit is particularly severe for Nissan, whose profitability has been deteriorating as it grapples with the turmoil that followed the ousting of Carlos Ghosn as chairman.

According to internal documents, Nissan plans to manufacture around 13,400 vehicles next month, compared with nearly 61,000 in May 2019.

The cut represents a big hit to Nissan's plant in Kyushu, which the automaker plans to operate on a single shift for much of this month and all of next month due to lack of demand for the company's Rogue Sport SUV crossover model, according to the company documents.

Output will decline 70 percent from initial plans to build around 44,800 units.

In June, domestic production will be cut to 33,700 vehicles, a drop from around 63,700 units last year, and down 43 percent from a previous plan for around 59,300.

Nissan declined to comment on its production plans.

The automaker has halted production at its plant in Tochigi Prefecture since early April and plans to keep output suspended through the end of May. Periodic stoppages at Nissan's Oppama plant in Kanagawa Prefecture have been common since earlier this month.

The pandemic has piled urgency on Nissan's efforts to downsize after two years of falling sales, deteriorating margins and depleting cash reserves forced the company to restructure.

Nissan's management has become convinced that the company needs to be much smaller and its latest recovery plan due next month will likely see a cut of 1 million cars to its annual sales target, senior company officials said earlier this month.

Automaking partner Mitsubishi Motors Corp., also suffering from a drop in demand for its cars, is planning to slash domestic output by nearly one-third over the next two months.

As both Nissan and Mitsubishi Motors struggle with declining sales, production plans show one bright spot as Nissan is planning an increase in production of the Nissan Dayz minicar, which Mitsubishi manufactures for Nissan for the Japanese market.

Coronavirus banner