Nissan to cut North American output by 20% to shore up US profitability: Nikkei

[mahatmakanejeeves]

Source: Reuters, via CNBC

Nissan to cut North American output by 20% to shore up US profitability: Nikkei

• Nissan Motor is slashing vehicle production by as much as 20 percent in North America to cope with falling profitability in the U.S.

• The U.S. is the automaker's biggest sales market.

• Cuts are already in progress at two assembly plants in the U.S. and three in Mexico.

Published 7 Hours Ago Updated 6 Hours Ago

Nissan Motor is slashing vehicle production by as much as 20 percent in North America to cope with falling profitability in the United States, its biggest sales market, Japan's Nikkei business daily reported on Monday.

Japan's No. 2 automaker has been slowing production in the United States, where an aggressive ramp-up in vehicle sales has come at the cost of increased discounting and fleet sales, which has eroded profitability in the world's second-largest auto market.

Cuts are already in progress at two assembly plants in the United States and three in Mexico, the Nikkei said, adding that employees will not be let go, and production lines will not be completely halted, with the cutbacks expected to wrap up later this year.

Nissan said that the report was not based on any announcement by the company. U.S. production of Nissan vehicles, including the popular Rogue crossover SUV and its high-volume Altima sedan fell 9.2 percent in the year ended March, company figures show, following a period of increased sales in 2016.

Read more: https://www.cnbc.com/2018/05/29/nissan-to-cut-north-american-output-by-20-percent-to-shore-up-us-profitability-nikkei.html

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Hat tip, Jalopnik: Nissan Is Slashing American Production By A Whopping 20 Percent

https://jalopnik.com/nissan-is-slashing-american-production-by-a-whopping-20-1826384273

Michael Ballaban
Today 9:50am

[bucolic_frolic]

1. Raise profits on lower volume equals massive price increases ahead

[ProfessorGAC]

3. Not How I Read It

I read it as a bunch of people are getting laid off. They make fewer cars, they need fewer people. The market may or may not sustain price increases, but lowering labor costs is not market driven.

I think it's fairly clear that is what they intend to do.

I hope anybody who voted for PINO that works there remember that their $800 tax cut is now meaningless.

[FSogol]

4. And the cost of cars will go up. less supply/ increased demand equals higher price$

Bad business men are bad for business. Who knew?

[ProfessorGAC]

8. Only If Competition Doesn't Swoop In

If Ford, GM, Honda, etc. don't follow suit by raising prices, they lose market share. That's not a good strategy to raise profit.

But, like you said, bad business men. . .

If they think the simple X therefore Y of supply and demand works in a market segment with such intense competition , i think they're in for a shock.

[bucolic_frolic]

6. The article says "employees will not be let go" and

they are seeking to reduce fleet sales. This reduces low-profit sales. Unless they are selling those vehicles at a loss, reduced volume will lower profits, not raise them.

Maybe they plan to speed up the assembly line and get more work from the remaining employees.

[ProfessorGAC]

7. While You're Correct. . .

. . .i don't trust them. And, speeding up would not reduce production, so i think that's unlikely.

Selling less cars and hoping the market would tolerate higher prices seems a very risky strategy. It's not like they're the only game in town.

I think this is going to lead to job cuts, no matter what they're saying now.

[CountAllVotes]

2. whelp

So much for that new car fantasy.

My 18 year old HONDA has gotta keep on going forever.

[j3161usa]

5. Pure Recessionary Reaganomics--THANKS DONALD J TRUMP--YOU"RE A GENIUS!!

Those so-called tax breaks were eating up by increased prices on goods and services. Prices are up on everything from gas to milk. But if you dare say anything about it, foxnews will call it fake news and invite trump and his clowns to BS everyone. How long will it take for conservatives who vote for these idiots realize that giving the rich huge tax cuts will create "profit taking" . They won't grow employment, instead they will raise prices, cut production, and lay off workers. Then the media will yell fake news and somehow connect it to Obama and Clinton. Cause we all Stupid!!

[old guy]

9. People who vote for these policies will never change.

They could be out in the yard scratching for worms with the chickens for something to eat, but they would still wear their MAGA hats.

[beachbum bob]

10. Ford announces end to sedans, now Nissan cut create a car shortage as

Trump throws tariffs on imports and imported car parts. Who pays?


Americans....and with rising interest rates, rising gas prices....can we predict a trump recession with a trump inflation rate?

[TomCADem]

11. First Ford and Now Nissan?

Didn’t they get the memo about the strong Trump economy? Shouldn’t the auto industry be expanding production with all of Trump’s tax cuts and deregulation?

[MichMan]

12. Discounting and fleet sales reduce vehicle residual values

This has the effect of higher depreciation making lease prices higher and customers disappointed at trade in time.

Nissan isn't the first one to decide to cut back on using fleet sales to absorb excess production inventories.

[Demsrule86]

13. And so it begins

Autos are the first to feel recession.

[Sherman A1]

15. Precisely

I hope that we both are wrong, but I suspect that not to be the case.

[Demsrule86]

16. My hubs was an auto engineer for thirty years....started out of school.Autos feel recession first...

I hope I am wrong.

[FormerOstrich]

14. and Trump was touting

Tariffs of 25% on imports. No one is going to be able to buy a car....least not us peon types.

eta... A lot of car are from South Korea these days.....I think a tariff might be punishment for their efforts with the North.