A larger-than-average new vehicle inventory, compounded by a change in strategy and dismal April sales figures, means fewer vehicles leaving Nissan assembly plants in the United States and Mexico in the foreseeable future.
The automaker plans to cut production by as much as 20 percent in the hopes of firming up its bottom line.
On May 1st, Nissan reported an 88-day supply of new vehicles, well above the industry average of 73 days, Kelley Blue Book reports. That’s double Subaru’s supply and still more than Fiat Chrysler or Ford.
According to Nikkei Asian Review, cuts are already underway at Nissan’s two U.S. assembly plants and three Mexican facilities. No job losses are expected. However, employees might find themselves with an extra day or two spent at home on any given week. By summer, production should decline by 10 to 20 percent, with the cutbacks drawing to a close in the fall.
Last month, the Nissan brand’s U.S. sales fell 29.1 percent, year over year, pushing the automaker’s 2018 volume to a 6.3 percent drop. Infiniti sales fell 17 percent, year over year, with the automaker’s luxury division posting an 8.3 percent year-to-date loss.
For May, Wards Auto predicts a daily selling rate 11.2 percent lower than the same month last year. That’s a larger anticipated sales loss than even Hyundai-Kia.
The month of April corresponds with the beginning of a fiscal year where Nissan plans to get moving on a new corporate strategy of lowered incentives, fewer fleet sales, and suppressed production. Obviously, this stands to bring fewer buyers into Nissan showrooms. While the automaker posted huge sales gains in the years following the recession, maintaining those higher volumes came at a cost — something CEO Hiroto Saikawa isn’t interested in continuing.
Nissan’s new North American chief, Denis Le Vot, has orders from HQ to boost brand value and profitability in the region. Long gone is the automaker’s former passion for growing market share above all other considerations. In the last quarter of 2017, operating profit fell 50 percent.
It’s expected that the throttling back of North American production will take a 3 percent bite out of the brand’s U.S. sales.
On the product side of things, Nisan buyers gain two new models this year: the subcompact, front-drive Kicks crossover (already available in Latin American markets), and the redesigned 2019 Altima sedan bound for the brand’s Canton, Mississippi and Smyrna, Tennessee assembly plants.