Nissan will no longer attach importance to the global southern market

Nissan Motor has begun to select and concentrate on its global strategy. It has begun to consider stopping production and closing two factories in Mexico and two factories in Kanagawa Prefecture, Japan, which are export bases for North America. It will also close one factory each in South Africa, India and Argentina. Of the seven factories considering production cuts, the remaining five bases except Japan are located in the “global south”. Japan will change its policy of using emerging markets as growth engines and focus on the Japanese, American, European and Chinese markets for reconstruction.

Nissan announced its policy of reducing factories worldwide at the earnings conference held on May 13. Specifically, in addition to India and Argentina, localized production in South Africa will also be ended. Recently, Nissan has also begun to discuss plans to reduce two factories in Mexico.

Of Nissan’s 3.1 million vehicles produced in 2024, Mexico accounted for 670,000 vehicles, or about 20%. India accounted for more than 150,000 vehicles, Argentina nearly 20,000 vehicles, and South Africa 10,000 vehicles. A series of adjustments means a farewell to Nissan’s past strategy of focusing on emerging markets.

In 1999, Carlos Ghosn, former chairman of Nissan, proposed a “revitalization plan” based on the layoffs of 21,000 people. After adjusting Nissan’s cost system, including its trading relationship with parts manufacturers, it began to expand globally in cooperation with France’s Renault.

In the six-year medium-term management plan “Nissan Power88” announced in 2011 under the Ghosn system, a route was proposed to increase the global market share from less than 6% at the time to 8%. The growth focus was on emerging market countries, and a policy was formulated to increase global production capacity to more than 8 million vehicles. As a brand for emerging countries, Nissan launched “Datsun”. The brand was produced and sold in India and Africa, trying to expand its market share in emerging markets, but sales were sluggish and it was announced that it would stop production in 2022.

Regarding Mexico, where Nissan established its first overseas production base, the company is considering reducing two factories. As an export base to the United States, Mexico produced 670,000 vehicles in fiscal 2024, but Mexico’s advantage as a production base is currently being shaken due to the tariff policy of the Trump administration in the United States.

Nissan will eliminate the problem of expansion route by reducing production capacity in emerging countries, and focus on improving efficiency and expanding sales in markets such as the United States, Europe, Japan and China to enhance competitiveness.

In China, which is the largest market, Nissan is in fierce competition with local companies such as BYD. Nissan is burdened with excess production capacity, and the focus is on how much it can improve production efficiency based on negotiations with its partners. Currently, the company has launched a new pure electric vehicle (EV) sedan “N7” equipped with artificial intelligence (AI) technology, and is also promoting offensive strategies such as exports outside of China.

In the United States, Toyota is launching hybrid vehicles (HV) at the right time and is expanding sales. Nissan has fallen into a sales slump due to its inability to launch HVs. As the demand for localized production has increased due to the tariff policy of US President Trump, Nissan will transfer part of the production of major models for the United States from Japan to the local market. However, Nissan’s US factories still have excess production capacity. In the future, it will also consider cooperating with partners such as Mitsubishi Motors.

Nissan believes that if it reduces two factories, it can achieve an appropriate operating rate. However, there are not many popular models that can increase sales. Whether the release date of new cars such as the new model of the pure electric vehicle “LEAF” (Chinese name: 葉风) in 2025 can be advanced has become a question.

Nissan’s reduction route involves global product strategy. The company’s policy proposed on the 13th shows that the number of chassis will be reduced from the current 13 to 7 by 2035.

The number of parts will also be reduced by 70% to improve the efficiency of the development system. By 2026, fixed costs and variable costs will be reduced by a total of 500 billion yen compared with 2024. The scale of layoffs will be increased from the current policy to 20,000 people, which is equivalent to the revival plan proposed by Ghosn.

With the cost reduction and reduction of regions brought about by structural reforms, the weight of each product in terms of profitability will increase. “Nissan is a brand with many fans and enthusiasts. We must make full use of this,” said Ivan Espinosa, the company’s president, on the 13th. Can the company become strong while creating attractive cars? Espinosa’s ability will be further tested.