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Thursday, 16 July 2020 22:14

Nissan Cutting Global Production 30% as Automakers Prep for New Pandemic Slowdown

Written by Paul A. Eisenstein, The Detroit Bureau
Nissan is cutting back on its production levels, including a 47% cut for the next three months. Nissan is cutting back on its production levels, including a 47% cut for the next three months.

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With the worsening global pandemic again taking a toll on automotive sales, there are growing indications manufacturers are preparing to trim back production, Reuters reporting Nissan Motor Co. will cut worldwide output 30% through December due to declining demand.

General Motors confirmed a report in TheDetroitBureau.com earlier this week that it is temporarily dropping a third shift at a light truck plant in Missouri due to weakening demand, and a senior Toyota official told us July 13 that the automaker is also considering production plans in the face of weakening U.S. sales.

 

Nissan will turn out just 2.6 million vehicles worldwide between April and December, down from the 3.7 million it produced during the same period last year, according to the Reuters report.

 

“We cannot comment on speculation regarding our product plans,” a U.S. spokesperson said when asked about the Reuters report.

 

The cutback would come at a particularly tough time for Japan’s second-largest automaker. It reported a $6.2 billion loss for the fiscal year that ended March 31, its first annual deficit in 11 years. When the figures were announced in May, CEO Makoto Uchida cited “excess sales expansion” as a factor and promised to keep production more closely aligned with demand, “maintaining financial discipline and focusing on net revenue per unit to achieve profitability.”

 

Nissan plans to adjust output in quarterly stages, Reuters reported, citing unnamed sources. For the July-September period, production will be reduced by 47% worldwide, then slowly creep back up through December.

 

One of the challenges facing the industry is the fact that total production shutdowns forced by the pandemic earlier this year have resulted in significant inventory issues, though these vary by product segment and market region. Overall, there were about 1.1 million fewer vehicles in U.S. inventory than was normal for this time of year, analysts with Cox Automotive reported during a media webinar earlier this month.

 

The most severe shortages impact the full-size pickup segment and then, to a lesser degree, SUVs and other light trucks. And dealers are reportedly facing the biggest problems in Southern states, such as Texas and Florida, where sales held up better than the rest of the U.S. during the original COVID-19 surge in March through May.

 

Now, however, it’s that very region being hammered by a new surge in the pandemic. A new estimate by analysts suggests the auto industry could be headed for another soft patch as the surge of COVID-19 sweeps across the Sunbelt, where some of the largest markets for new cars are located.

 

“The surge in COVID-19 cases across the country is negatively impacting consumers and dealers. Almost half of the shoppers delaying their purchase described this as a ‘scary’ time to buy a vehicle,” Cox Autotive analysts said in their latest Consumer and Dealer Sentiment Study released this week.


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