Why Nissan Is Slashing North American Production

Japan-based automaker Nissan is planning to cut vehicle production at its two U.S. and three Mexican assembly plants by as much as 20%, according to a Monday report in Nikkei, Japan’s daily business newspaper. The automaker already has begun slowing down production at the plants but is cited by Nikkei as saying no employees will be fired and no production lines will be entirely halted.

Nissan’s U.S. sales are down 6.5% year over year for the first four months of the year. Car sales are down 13.6% and truck sales are flat. But in April alone, car sales were down 34% year over year and truck sales were down 22%, with total sales down 28%.

Since the financial crisis of 2008, Nissan has been focused on growing market share in North America. To do that, the company turned to high-volume, low-margin fleet sales and offered rich incentives to retail customers.

According to the Nikkei report, Nissan plans to reduce its sales volume and its incentives and focus more on profits than market share. One glance at the company’s U.S. April sales report tells the story.

Only one car, the Sentra, has sold more cars through April this year than through April last year. The company’s truck division is doing better, led by the new Frontier midsize pickup. But total truck sales were down 23% in April, and that decline is due to more than the fact that there were two fewer selling days this year than last.

U.S. consumers looking to buy a midsize pickup are likely to include the Nissan Frontier in their tire-kicking round, but they also need to have a push to buy the vehicle. Without the cash incentives, it’s no sale. For the truck division, this is likely to get worse before it gets better, when the new 2019 Ford Ranger hits dealer showrooms later this year.