Nissan to slash global output by 20% over four years; some plants to close

Japan’s Nissan Motor Corp. plans to slash global vehicle production by 20% to 5.4 million units a year by the end of its 2023-24 fiscal year (April-March), the carmaker said Thursday, based on average run rates of more than 80% of capacity.

The cuts, spread over four years, will involve it slashing global production through measures that include permanent plant closures in Indonesia, Barcelona in Spain and optimizing its US operations.

The Indonesian plant has a production capacity of about 260,000 units/year and the Barcelona plant 120,000 units/year.

Although the Indonesian and Spanish plants will shut, production will be maintained at Samutprakan in Thailand and Sunderland in the UK, Nissan said.

The Thai plant has a production capacity of 295,000 units/year while production at Sunderland hit 507,430 vehicles in 2016.

Nissan said it would exit “South Korea, the Datsun business in Russia” and streamline operations in some markets in ASEAN.

The move to consolidate its operations came as Nissan swung to a net loss of Yen 671.2 billion ($6.23 billion) in 2019- 20, against a net profit of Yen 319.1 billion the previous year.

The net loss is Nissan’s worst showing since 1999-2000, when it posted a net loss of Yen 684 billion.

Along with the weak performance, “Nissan estimates global TIV (total industry volume) to decline by approximately 15%-20% in FY20 [2020-21] from the prior year due to the COVID-19 pandemic,” but did not disclose any details, saying it “will issue its FY20 forecast as soon as a reasonably calculated outlook is available.”

In 2019-20, Nissan’s sales fell 10.6% to 4.93 million units, so a 15%-20% drop would be about 739,500-986,000 units, S&P Global Platts calculations showed.

Looking ahead to 2022-23, Nissan plans to boost its electric vehicle and autonomous vehicle sales to 1 million units and 1.5 million units, respectively.

Nissan’s scaling back of production will affect its needs for automotive steel.

In April, crude steel production in Japan fell 23.5% year on year to 6.62 million mt, data from the Japan Iron and Steel Federation showed, while output of hot-rolled steel products fell 22.1% to 5.86 million mt. Japanese carmakers’ production tumbled in April as the coronavirus pandemic slashed demand.

Nissan said Thursday its global April production plunged 62.4% on the year to 150,388 units while sales fell 41.6% to 217,264 units.

In Japan, steel making for vehicles are primarily produced from blast furnaces, and collectively, their crude steel production contracted 6.9% year on year in January-April, meaning less need for raw materials. Over the same period, iron ore imports contracted 3.8% to 37.2 million mt, the latest customs data showed.

— Clement Choo, Samuel Chin