Nissan’s latest production cuts unsurprising in face of weak global demand

Following the news that Nissan is to further cut production in Japan due to COVID-19 impacts on global vehicle demand;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“Nissan is to further cut production at its three Japanese manufacturing facilities – Oppama, Tochigi and Kyushu – with new production suspensions planned on dates from June 29 through July 31. It follows similar production suspensions in May and earlier this month.

“The latest move reflects weak demand for Nissan products at home and in major export markets. It is unsurprising given how far demand has fallen due to the COVID-19 crisis. Global light vehicle sales fell 33.8% in May to 4.9 million from 7.5 million a year ago and in Japan, the vehicle market plunged 45%.

“GlobalData’s base COVID-19 light vehicle sales scenario forecasts a fall of 17.2% on 2019 to 73.7 million sales in 2020. The hit to the market will be greater than the 2007/8 financial crisis.

“All major automakers in Japan have made significant production cuts in previous months, including Toyota, Nissan, Honda, Mazda, Suzuki, Daihatsu and Mitsubishi, in response to plunging global demand and measures introduced by the Japanese government to help prevent the local spread of the disease.

“For loss-making Nissan there is the additional factor that it is firmly in turnaround mode and now focused on aligning manufacturing activity to profitable sales rather than pushing product to market amid expansive volume targets.”

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