Nissan plans to cut Japan May car output by 78 percent

2015 Nissan Xterra SUV

Japanese automaker Nissan Motor plans to cut the number of cars it produces at home in May by 78% from last year, as the spread of the coronavirus continues to trouble economy and the automaker was already having a hard time with falling sales.

As global automakers reel from declining sales amid lockdowns enforced in many countries to curb the spread of the virus, the hit is severe for Nissan, whose profitability has been degrading as it deals with the turmoil that followed the ousting of former boss Carlos Ghosn.

Nissan prepares to manufacture around 13,400 vehicles in May, according to documents read by Reuters, compared with almost 61,000 units made in May last year.

The cut represents a big hit to Nissan’s plant located in Kyushu, southern Japan, which the automaker prepares to operate on a single shift for much of this month and the entire next month, because of a lack of demand for the Rogue Sport SUV crossover model, according to the documents, which haven’t been made public.

Output will drop 70% from initial plans to build about 44,800 units.

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

Nissan is yet to comment on its production strategy.

The automaker has stopped production at its plant located in Tochigi, north of Tokyo, since early April, and prepares to keep output suspended through the end of May. Periodic stoppages at Nissan’s Oppama plant located in Kanagawa Prefecture have been common since the beginning of this month.

The coronavirus crisis are causing urgency on Nissan’s efforts to downsize, after two years of declining sales, deteriorating margins and depleting cash reserves has forced the automaker to restructure.

Coronavirus has so far infected more than 3,040,709 people and killed more than 211,099 people worldwide.

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

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