Nissan Motor Corporation, facing urgent financial challenges, has announced significant production cuts at its U.S. assembly plants, coupled with buyout offers to its hourly workforce. The cuts come as the company grapples with declining sales and increasing inventory levels, prompting a strategic realignment to restore profitability.
Starting April 2025, Nissan will consolidate operations significantly at its Smyrna, Tennessee, plant, which produces key models like the Rogue compact SUV and the Altima midsize sedan. According to reports, one production line will maintain two shifts, but the other will be reduced to just one. By September 2025, similar reductions will occur at the Canton, Mississippi, plant, which manufactures the Altima and Frontier pickup trucks. At the same time, Nissan's engine plant located at Decherd, Tennessee, will also see shifts adjusted to reflect current demand.
The automaker's drastic measures come on the heels of its November announcement of plans to cut 9,000 jobs globally, aiming to slash $2.6 billion from its operational costs due to significant quarterly losses. "Nissan is taking urgent measures globally to turnaround its performance and create a leaner, more resilient business capable of swiftly adapting to changes in the market," stated a Nissan spokesperson, addressing industry concerns over weak sales and excess inventory.
The sales slump has been particularly sharp, with sales of the Rogue dropping by 9.5 percent last year and Altima sales declining by 11 percent. This drop prompted Nissan to reduce its total U.S. production output by as much as 12 percent this year alone, equaling roughly 63,000 fewer vehicles, according to industry analysts.
To mitigate the impact on its workforce, Nissan will offer voluntary severance packages aimed at reducing ranks by approximately 1,500 workers. David Johnson, head of manufacturing and supply chain management at Nissan North America, described the adjustments as necessary to generate viable revenues for the company. “It’s challenging, but it’s the thing we have to do to be able to make sure we’re generating the right type of revenues for the company so we can invest in the future,” he commented, highlighting the urgency behind the decision-making process.
Looking to the future, Nissan is also poised for shifts toward electric vehicle production. The Smyrna plant is expected to start assembling a plug-in hybrid version of the Rogue by 2027, contingent on returning to two shifts. The Canton assembly site is similarly projected to ramp up operations for electric vehicles potentially by 2028.
Analysts within the industry view these production cuts as indicative of broader trends, with many automakers realigning to meet new market demands, especially as consumer preferences shift toward electric models amid changing regulatory landscapes and competitive pressures.
Complicably, this also occurs alongside discussions between Nissan and Honda about forming a merger, which could bolster both companies' positions within the saturated automotive market. If finalized, this merger could create the world's third-largest auto group and is also seen as pivotal for Nissan as they navigate their current hardships.
While Nissan has faced challenges, the company's leadership signals hope for fortifying their business against future uncertainties. Johnson noted, “We see the market being very challenging for certain product lines,” reinforcing the notion of prioritization and restructuring to adapt.
Overall, Nissan's current path reflects necessary adaptations to dynamic market conditions, focusing on improving efficiency and remaining competitive within the automotive industry. The company’s strategy to balance these cuts with future innovations may prove pivotal as it aims to regain market share and endure the current downturn.